SACRAMENTO, Calif. -- Ted Kennedy, the nation's most persistent backer of nationalized health care, must be smiling at the irony. Almost four decades after he first proposed the idea, Gov. Arnold Schwarzenegger, a Kennedy relative by marriage, is touting his own version of universal coverage, and, if adopted, the idea could go nationwide quickly. It's no wonder critics are already dubbing the ostensibly Republican chief executive "Schwarzenkennedy."

This isn't the first time Mr. Kennedy has found a Republican to carry water for him. In 1971, after Medicare spending had increased by more than 70% in five years (although the number of people enrolled grew by only 6%), Richard Nixon declared a "health-care cost crisis" and worked with Mr. Kennedy to propose mandatory employer-provided health insurance. The idea foundered, but a modified version now has been revived by Mr. Schwarzenegger, who wants to require that every person buy health insurance, or be covered by an employer or the government. Massachusetts has a more modest law in place, and an adviser to Mitt Romney helped Schwarzenegger aides on their plan.

Liberals are overjoyed at the about-face by a governor who in 2005 vetoed a Democratic bill that would have merely expanded the state's coverage of children, saying the $300 million price tag was too high. Assembly Speaker Fabian Nunez praises the governor's new proposal: "This is a plan Assembly Democrats could have written."

Indeed, they already have -- and Mr. Schwarzenegger fiercely opposed it at the time. In 2003, then-Gov. Gray Davis, fighting to stave off his recall, signed a law mandating employers with 20 or more employees provide health coverage or pay into a state fund that would provide it. After Mr. Davis was recalled, Mr. Schwarzenegger helped lead an effort to repeal what he called a "job-killing health-care tax." In 2004, 51% of voters agreed and repealed universal coverage in the same election in which George W. Bush lost the state by 10 percentage points and the highly liberal Sen. Barbara Boxer was re-elected by 20 points.

But the next year, Mr. Schwarzenegger suffered a stinging defeat as public employee unions spent $130 million in a special election to defeat four reform initiatives he supported. A chastened governator swung left by hiring as top aides Susan Kennedy and Daniel Zingale, two former deputy chiefs of staff to the recalled Mr. Davis; Jason Kinney, a Davis speechwriter, joked that he had decided "to finish the second term of Gray Davis." No one is laughing now. The behind-the-scenes architects of much of the governor's plan were Ms. Kennedy and Mr. Zingale, who also served as Mr. Davis's director of managed health care.

Last November, Gov. Schwarzenegger won landslide re-election in part by winning 91% of Republicans with an ironclad pledge not to raise taxes. He pounded Phil Angelides, his Democratic opponent, for wanting to raise taxes by $7 billion to pay for universal health care. But now the estimated cost of the Schwarzenegger plan to cover California's uninsured, including two million illegal aliens, is $12 billion. State subsidies for people to buy insurance will extend to those earning up to $50,000 a year, more than California's median income. "He's creating a welfare state where more than half the people are in the wagon being pulled than outside the wagon pulling," says one health-care analyst.

As bad as the policy implications are, the governor's plan may be fatally flawed, politically. He insists it doesn't raise taxes, despite billions in new charges on doctors, hospitals and employers. He prefers to call the new revenue "in-lieu fees" and "coverage dividends." "He excoriated Phil Angelides, rightly, for proposing the same tax increases he has put on the table," says GOP state Sen. Tom McClintock. "He is now pushing the second largest tax increase in California history. I won't be able to trust anything he says."

Whether the new revenue is a tax or not is important, because if it is a tax the plan must garner a very difficult two-thirds vote in both legislative houses. Barring that, the California Supreme Court will have trouble with the concept. A fee on employers who don't offer health insurance probably requires only a majority vote. However, the imposition of a levy on the gross revenues of doctors and hospitals is almost certainly a tax that would require two-thirds approval.

Then there are the feds. The $5 billion a year in extra federal Medicaid money, which the governor is banking on, is shaky. An even greater barrier is Erisa, the 1974 federal pension law that preempts all state laws that regulate employee benefits. Last summer, a federal judge threw out Maryland's so-called "Wal-Mart law" requiring large firms to spend 8% of their payroll on health care because "state laws which impose health or welfare mandates on employers are invalid under Erisa." Just yesterday a federal appeals court upheld the ruling voiding the Maryland law.

Rather than pursue a legally dubious universal coverage proposal, Mr. Schwarzenegger should have pursued the universal access he used to tout. He could sign up more of the nearly one million Californians eligible for current health programs but not yet enrolled. The 49 coverage mandates that make insurance so expensive (Idaho has only 13) could be reduced and residents allowed to buy coverage from other states. Nurse practitioners could be allowed to set up their own clinics. Instead, the governor's plan piles on a new mandate that bars insurers from turning down anyone based on health status or age. When New Jersey instituted a similar rule in 1993, premiums jumped 500%.

Mr. Schwarzenegger insists he is pursuing a centrist course that borrows from both the right and left. But more realistically, he is imitating Richard Nixon's old strategy of throwing rhetorical bones to his right while attempting to appease the left with liberal programs. Emmet John Hughes, an Eisenhower speechwriter who knew Nixon well, once said he "judged any declaration of speech not by its content but by its impact." That explains Nixon's dramatic lurches into or toward wage price controls, a guaranteed annual income and mandatory employer health insurance.

Arnold Schwarzenegger used to claim he admired Ronald Reagan most "because he stuck by his principles when others wouldn't." But with his Rube Goldberg health plan Mr. Schwarzenegger has demonstrated that at his core he prefers roles more suited to Tricky Dick than the Gipper. Should he succeed, the long-term dream of nationalized health care held by Ted Kennedy, and Hillary Clinton, will be closer to reality than ever.

Now we're getting somewhere. The U.S. has long needed a debate over health care and tax subsidies, and President Bush got ready to rumble last night with his proposal to make insurance more affordable for most Americans.

For all the griping about our system, Americans have the most advanced health care in the world in part because we still have something resembling a private market for insurance. But it is not a truly efficient market because current tax policy lets businesses -- but not individuals -- deduct the cost of health expenditures. Thus most Americans with private insurance get it from their employers, which leads to inequities and insulates individuals from the real cost of their treatment decisions.

Mr. Bush's "standard deduction" for health care would move in the direction of solving both problems. Instead of giving employers an unlimited deduction and individuals none, Mr. Bush would give every family a $15,000 deduction ($7,500 for individuals) regardless of their insurance source.

That might mean a slight tax increase for those who currently have the most expensive insurance plans. But the average employer-sponsored family plan runs about $11,500 annually, and about 80% of the 160 million employer-insured Americans would benefit. All Americans with employer-sponsored insurance would have to report the value of their health benefit as income, but they could deduct the full $15,000 no matter how much their insurance cost.

The 17 million Americans who buy their own coverage would be big winners. And because the tax deduction would apply to payroll as well as income taxes, the benefits would be large even for low-income earners. So a family making $60,000 would wind up with a tax savings of $4,500, which would offset the cost of acquiring coverage in many states. Meanwhile, a young person making $40,000 could buy a high-deductible plan for, say, $1,000 and actually get a tax break of $2,250 for doing so. The Treasury estimates the new deduction would add at least five million Americans to the ranks of the insured, but our guess is that would be higher given the incentives all of this would provide for new private insurance products.

Individuals who buy their own health insurance now struggle because there are so few of them and they can buy only in a single state market. That means insurers have little incentive to develop and market innovative products. But this will change if the equalized tax treatment convinces enough people that it makes more sense to have their own, portable policies than take whatever their boss offers. Imagine the same kind of capitalist energy devoted to selling health insurance as you now see selling where to roll over your 401(k).

These new products are also likely to be policies that put individuals directly in charge of more routine spending. That's because removing the tax advantage would mean it will make less financial sense to "insure" for predictable expenses like several annual office visits. That in turn could put pressure on health care providers to post -- and actually compete on -- prices. Such new price awareness might even generate pressure for states that overregulate their insurance markets (New York, Massachusetts) to ease their costly mandates.

It's true that additional subsidies might be needed for some people with chronic illnesses who might have a harder time finding private insurance in this kind of world. And we'd also like to see a more national insurance market, with companies able to sell policies over the Internet free of the worst state mandates.

But the biggest problem with Mr. Bush's plan is that it wasn't offered two years ago, when it had a better chance to pass. The White House wasted its first term health energies on a failed attempt to buy votes with the Medicare drug benefit. Now the GOP is a minority in Congress, and Democrats aren't likely to favor Mr. Bush's ideas because they think health care is a winner for them in 2008.

Ways and Means Chairman Charlie Rangel was quick out of the box to call the President's idea "a dangerous policy that ultimately shifts cost and risk from employers to employees." But the numbers show that most Americans would have lower costs, and in any case the current tax treatment of health care benefits tends to benefit the well-to-do over the poor. Figures from the Lewin Group show that the average tax subsidy under the current system was $2,780 for families earning over $100,000 in 2004, while those with incomes below $30,000 got less than $725 in aid. Democrats ought to favor this idea on equity grounds alone.

But no matter if they don't. We're fated to debate health care in 2008 anyway, and Mr. Bush is finally offering a GOP reform based on market principles that these pages have encouraged for years. Most Americans can see for themselves that the current employer-based system is breaking down, as more companies pass along the rising cost of their insurance to employees (in higher co-pays and deductibles). Yet the system remains opaque and frustrating because of the underlying tax bias for businesses instead of individuals.

This status quo won't hold, and the political race is going to be between those who want to move to a more genuine market and consumer-based health care, and those who want to move toward Canada, Europe and more government control. The Bush plan ought to jump start that debate.

Holman W. Jenkins Jr. is a member of the editorial board of The Wall Street Journal and writes editorials and the weekly Business World column.Mr. Jenkins joined the Journal in May 1992 as a writer for the editorial page in New York. In February 1994, he moved to Hong Kong as editor of The Asian Wall Street Journal's editorial page. He returned to the domestic Journal in December 1995 as a member of the paper's editorial board and was based in San Francisco. In April 1997, he returned to the Journal's New York office. Mr. Jenkins won a 1997 Gerald Loeb Award for distinguished business and financial coverage.Born in Philadelphia, Mr. Jenkins received a bachelor's degree from Hobart and William Smith Colleges in Geneva, N.Y. He received a master's degree in journalism from Northwestern University in Evanston, Ill., and studied at the University of Michigan on a journalism fellowship.Mr. Jenkins invites comments to holman.jenkins@wsj.com.

The Biggest Secret in Health CareFebruary 7, 2007; Page A14President Bush might seem a candidate for OCD treatment, what with his insistence that the fix for health care is tax reform. He was at it again in his latest budget proposal, which calls for reforming the unlimited tax break for job-related health insurance.

Where does he get such ideas?

The answer: From every recent president that went before him, including Presidents Reagan, Bush and Clinton. And from all the wonks in wonkdom, who've long understood that the tax code was the problem and who've occasionally even shared this understanding with the public, most recently during the heady days before the Clinton health plan was submitted to a congressional dumpster.

A newspaper we know and love, in 1993, reported as a nearly uncontested fact: "The tax breaks on this enormous transfer of wealth have created a health-care market characterized by inefficiency, ignorance and excess."

The head of Blue Cross & Blue Shield declared: "The most powerful incentive is the tax code. We've been through five decades of teaching the individual that health care is a free good."

Paul Ellwood, godfather of the Clinton plan, said: "Changing the tax status of health benefits is the glue that holds managed competition together."

Bill Clinton himself said: "There has to be some sort of personal responsibility in this health-care system we set up."

Let the current President Bush give voice to the same analysis, however, and it must be some kind of supply-side hokum.

To rehearse: The tax code is the original hectoring mommy behind our health-care neuroses. It gives the biggest subsidy to those who need it least. It pays the affluent to buy more medical care than they would if they were spending their own money. It prompts them to launder our health spending through an insurance bureaucracy, creating endless paperwork. It prices millions of less-favored taxpayers out of the market for health insurance. It fosters a misconception that health care is free even as workers are perplexed over the failure of their wages to rise.

Clark Havighurst, a Duke University sage, points to one of the many destructive consequences: "With insured consumer-voters generally believing that someone other than themselves is paying for their health care, they see no reason not to approve regulatory and other public policies that raise the cost of that care and foreclose opportunities to economize."

He was thinking of the congressional rage to prevent managed care from saving us money, after Congress and everyone else first championed managed care as a way to save us money.

Others point to a destructive consequence for the practice of medicine itself. Patients, because their only skin in the game is their skin, end up listening to doctors and hospitals who are massively incentivized to expose them to more procedures, more tests and more drugs than patients, quite apart from any consideration of costs, would choose for themselves.

Guess what? The patients are right. Much of this superfluous care is bad for their health. (Such is the finding of a long-running Dartmouth Medical School study of national treatment patterns.)

Much better, in our view, would be simply to do away with the tax break and let businesses and consumers adjust. The insurance industry wouldn't stand around and watch its livelihood vanish. And tax rates could be adjusted to make sure the overall tax burden remains unchanged. You'd be shocked at how quickly the system would right itself.

Alas, there is panic on K Street when anyone suggests doing away with the tax break directly. The health industry goes ape. (Think doctors, hospitals, drug makers, insurers, etc. don't enjoy having a $200 billion-a-year tax subsidy to encourage consumption of their products? Think big business doesn't like having a tax subsidy for a good chunk of its employment costs? Think they don't lobby?)

So Mr. Bush makes peace with the tax code's bias toward health spending in order to do battle with the particular vice of our overreliance on third-party payment. He does so by equalizing the tax treatment of health dollars whether they flow directly from a consumer pocket (the vehicle here is health savings accounts) or through a third-party laundromat.

He would do so by equalizing the treatment of health insurance whether you buy it yourself or your employer buys it for you (his latest plan).

No, hosannas will not be sung to him by left or right. However, keep something in mind as the 2008 debate heats up. The oft-mouthed goal of expanding health insurance to the poor would be far easier to achieve if we stopped subsidizing overconsumption by the non-poor.

There's a lesson in presidential leadership here. Mr. Clinton lost interest in health care after a few months when he discovered health care wouldn't result in a monument to his presidency. In a very pre-postmodern approach, Mr. Bush identified the same basic problem and has worked steadily away at it, showing that a president can accomplish something as long as he's willing not to receive any credit.

The one great and glaring fault in his record is the creation of an unsustainable drug benefit to add to the unsustainable burden of future Medicare spending. Then again, what is unsustainable is unsustainable.

The pattern for that reform is already present between the lines -- towards greater reliance on saving than taxing, towards greater reliance on individual responsibility than on the illusory free-lunchism of government transfers. For the problem of Medicare is the problem health care writ small: The illusion that somebody else is available to pay our bills for us.

The U.S. government's top accountant says the law that added a prescriptiondrug benefit to Medicare may be the most financially irresponsiblelegislation passed since the 1960s. U.S. Comptroller General David Walkersays Medicare -- barring vast reform to the program and the nation'shealthcare system -- is already on course to possibly bankrupt the treasuryand adding the prescription bill just makes the situation worse. Walkerappears in a Steve Kroft report to be broadcast on 60 MINUTES Sunday, March4 (7:00-8:00 PM, ET/PT) on the CBS Television Network.

"The prescription drug bill is probably the most fiscally irresponsiblepiece of legislation since the 1960s," says Walker, "because we promise waymore than we can afford to keep." He argues that the federal governmentwould need to have $8 trillion today, invested at treasury rates, to coverthe gap between what the program is expected to take in and what it isexpected to cost over the next 75 years Ð and that is in addition to morethan $20 trillion that will be needed to pay for other parts of Medicare."We can't afford to keep the promises we've already made, much less to bepiling on top of them," he tells Kroft.

The problem is the baby boomers. The 78 million people born between 1946 and1964 start becoming eligible for Social Security benefits next year."They'll be eligible for Medicare just three years later and when thoseboomers start retiring en masse, then that will be a tsunami of spendingthat could swamp our ship of state if we don't get serious," says Walker.

As life expectancies increase and the cost of health care continues to riseat twice the rate of inflation, radical reform in health care will benecessary, Walker says. He says the federal government is also going to haveto find ways to increase revenue and reduce benefits. The alternative isugly. Walker shows Kroft General Accounting Office long-term projectionsthat assume the status quo continues, with the same levels of taxation,spending, and economic growth. By the year 2040, Walker says, "If nothingchanges, the federal government is not going to be able to do much more thanpay interest on the mounting debt and some entitlement benefits. It won'thave money left for anything else...."

Sen, Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, tellsKroft that this problem is well known among members of Congress: "Yes, theyknow in large measure, Republicans and Democrats, that we are on a coursethat doesn't add up." And he acknowledges nobody is addressing the matter.Why? "Because it's always easier not to," Conrad says, "because it's alwayseasier to defer, to kick the can down the road to avoid making choicesÉYouget in trouble in politics when you make choices."

Walker believes the biggest problem may be that everything seems okay now,so people don't have the sense of urgency that's needed to make toughchoices. But the longer we wait, he argues, the harder it's going to be tosolve the problem. "The fact is that we don't face an immediate crisis andso people say, ÔWhat's the problem?' The answer is, we suffer from a fiscalcancer...and if we do not treat it, it could have catastrophic consequencesfor our country," he tells Kroft. *

TOPEKA, Kan. -- The eyes of the nation may soon turn to Kansas as conservatives in the state legislature try to cobble together a free-market health care bill to replace Medicaid. Kansas would be the first state in the nation to offer a market-based alternative to California's Arnold-Care and Massachusetts' Romney-Care. "We want the free market, not command-and-control government, to be the driver of this system," says state Rep. Jeff Colyer, the only practicing physician in the Kansas House.

Dr. Colyer says the Kansas health care system is "a wobbly legged stool" consisting of "a shrinking commercial market, government managed care that has grown to 30% [Medicaid], and the uninsured, 11% of the market."

The plan that Kansas will soon take up has several facets. First, it allows families to use pre-tax dollars to purchase health care. This saves families 15% right off the bat. Second, the plan reforms Medicaid by essentially providing a voucher to Medicaid patients and allowing them to purchase private insurance. "This expands, rather than contracts the private insurance market," Dr. Colyer says.

Third, the state would provide bridge insurance to Kansans who are temporarily uninsured, mainly those between jobs. For those who still don't have health insurance, the state would set up health clinics to provide basic care.

The group Kansas Americans for Prosperity believes the Colyer-backed plan could be a model for other states and held a conference this week in Topeka to promote it. Unfortunately, state legislators I talked to here believe that Governor Kathleen Sebelius favors a more conventional approach, with employer mandates and expansions of the antiquated Medicaid system. One proposal is to make Medicaid available to families with incomes three times the poverty rate, which is higher than the average income in the state. This would create a de facto government run health care system in Kansas.

It's pretty clear that the federal government isn't going to solve the health care crisis -- particularly the Medicaid cost explosion. States will have to take the lead and 11 have already received waivers from the feds to come up with their own cost-containment strategies. Kansas now has a plan to do just that but with tax cuts and markets, not what Dr. Colyer calls "the freakonomics of traditional Medicaid."

It's been mostly doom-and-gloom days for Republicans--a lost majority, Iraq, U.S. attorneys, soul-searching over just what happened to the party of Reagan. So it's worth noting a new intellectual debate that's rumbling to life in the party wings, one that could signal whether the GOP is capable of rediscovering its free-market principles.

That debate is about the future of health-care reform, and it got some momentum this week when Oklahoma Sen. Tom Coburn released a big-ideas blueprint for restructuring the entire health-care system--the tax code, Medicare, tort liability, insurance laws--along free-market lines. Dr. Coburn's plan builds on the White House's own bold proposal in January to revamp tax laws so as to put consumers back in control of their health-care decisions. Both plans are about fundamental, bottom-up health-care reforms, cast in the language of markets, consumers and individual control.

They're also the polar opposite of the health-care "reforms" that won GOP Govs. Arnold Schwarzenegger and Mitt Romney media huzzahs this past year, and have thus captivated no small few in the Republican party. The state plans are heavy on regulation, wrapped in red tape, and happy for taxes, though much of the bad has been squeezed behind a few fig leaves of market reform. This is mini-me Republicanism, but it has also allowed its creators to boast that they are offering "universal coverage"--a phrase that polls fabulously.

Which side wins? Who knows. But what is clear is that the scrap has come at a crucial moment. Americans are howling for relief for spiraling health-care costs and companies are drowning in doctor bills. Yet until recently, Democrats have been alone in offering a comprehensive answer to the problem: government-run health care. These liberals never offer details about the extraordinary costs, the miserable service, the wait lines, the Walter-Reed-like facilities, but then again, they don't have to. They have an easy-to-describe "plan," which is more than can be said of the other party. This has led to some glumness in conservatives ranks, and a feeling that the debate has already been lost. That pessimism helps explain the Schwarzenegger and Romney programs, both of which ape the left's mantra of "universal coverage." Yet all that underestimates just how much intellectual progress conservatives have made since 1993 and the HillaryCare debate, when they were forced to start thinking seriously about health issues.

Conservative health-care guru John Goodman remembers going to Washington in the early 1990s to get Republicans interested in individual health savings accounts, and "only about five guys would even meet with me," he recalls. Now, HSAs "are a religion" among the right, he notes, and Republicans used their last years in the majority to significantly expand access to these accounts. In the past 15 years, the GOP has also planted the roots of Medicare reform, looked at interstate trade in health insurance, and got behind competitive Medicare reforms in their states.

The recent White House and Senate proposals are meant to package these ideas into a more unified, free-market whole. Mr. Coburn, like the White House, would remove the subsidy corporations get for health care, and instead give the money to individuals--putting them in charge of their health expenditures. It would expand HSAs, and allow consumers to buy insurance from any state, thereby avoiding costly regulations. It would modernize Medicare, allowing workers to invest their payroll taxes into a savings account and control their care in their retirement years. It would free up the states to inject Medicaid with new flexibility and competition.

There's plenty of big ideas in these new proposals over which conservatives can argue. Do they get behind tax rebates (à la Coburn) or tax deductibility (à la President Bush)? Do you leave medical liability to the states, or intervene with federal legislation to set up state "health courts"? Or do they write all this off as too hard a political sell, and run for the Schwarzenegger "universal coverage" cover?

The important thing is that debate equals education, which equals understanding, which equals precisely what the GOP needs right now. The Heritage Foundation's Mike Franc says Republicans are still too preoccupied with health-care small-ball--which procedures should be covered by Medicare, how much should generics cost--to get their heads around the broader subject. "This is still outside their intellectual comfort zone, and Republicans never do well in that situation," he says. "But to win this debate--the defining issue of the next 40 or 50 years--they're going to have to address it forcefully, head-on, and with every bit of their intellectual firepower."

You'd have thought the right would have figured this out by now, given its success at reframing other policy issues. When Republicans railed about welfare queens, they were viewed as the heartless party. When they turned the debate into one about the vicious cycle of dependency and poverty that welfare causes, they captured voters' imagination--they captured even Bill Clinton's imagination--and pushed through entitlement reform. Today, even the left agrees welfare-recipients should work.

Americans similarly tuned out the GOP's gripes about federal education spending, and reasonably so. All parents knew was that their kids were failing, and that Democrats were warning that fewer dollars would make things worse. Only when the GOP reframed the debate, and explained that this was a question of competition, of accountability, of greater parental choice, did they tap into long-held American ideals. Flowering charter schools and vouchers are one result. Ted Kennedy's admission that standards matter is another.

Those on the free-market side are starting to understand the need for a new language, especially if they are to coax more nervous elements of their party into embracing radical change. When President Bush unveiled his health-care tax overhaul in the State of the Union, he stressed that health-care decisions needed to be made by "patients and doctors," not government or insurance companies. Mr. Coburn's bill summary is littered with the words "choice," "empowerment," "competition," "flexibility," "control"--which is not only an honest assessment of what his proposal would provide, but one with which Americans can identify. With Democrats running the show, Republicans now have the quality time to hash through this debate, and if they're smart, that'll be a priority. The left is so confident it owns the health-care issue, and so bereft of creative ideas, it risks squandering its advantage--just as the GOP lost its own credibility on fiscal restraint. But first, Republicans need to figure out what they believe.

Ms. Strassel is a member of The Wall Street Journal's editorial board, based in Washington. Her column appears Fridays.

Any doubt that "universal" health care has returned as a dominant political issue vanished with last month's forum for Democratic Presidential candidates in Nevada. "We need a movement," Hillary Clinton declared. "We need people to make this the No. 1 voting issue in the '08 election."

She and her friends in Congress are already working on it, notably by proposing to greatly expand the State Children's Health Insurance Program. "Schip" was enacted in 1997 as Bill Clinton's health-care consolation prize after the implosion of HillaryCare. It expires in September without reauthorization, and Democrats are using the opening to turn it into another giant middle-class health-care entitlement. Call it HillaryCare on the installment plan.

Schip was conceived--or at least sold--as a way to insure children from low-income families that aren't poor enough to qualify for Medicaid. Included as part of the Balanced Budget Act of 1997, Schip began as a federal block grant of about $40 billion over 10 years. States receive an annual fixed federal contribution. Then they match the funds and design their own programs, by expanding Medicaid, creating a separate Schip program or some combination. States determine eligibility and benefits; some have premiums or co-pays, usually at negligible rates.The Bush Administration wants to add $4.8 billion to the Schip budget, bringing it to $30 billion over the next five years. Democrats want to see that and raise by $50 billion to $60 billion. They pronounce Schip "underfunded"--and sure enough, 2007 funding already falls short of covering enrollees in 18 states by about $900 million.

But this "crisis" arose because some states have grossly exceeded Schip's mandate. They are using the program to expand government-subsidized coverage well beyond poor kids--to children from wealthier families and even to adults. And they're doing so even as some 8.3 million poor children continue to go uninsured.

The Schip legislation defines potential recipients as children in families making twice the federal poverty line, or $41,300 a year for a family of four. But states are encouraged to apply for waivers to allow for more flexibility. Now 15 states have eligibility thresholds above 200% of poverty, and nine of those are at or over 300%. In New Jersey, the figure is 350%. New York recently passed a budget raising eligibility to the highest in the nation at 400%--or $82,600 for a family of four. That's an income close to what Democrats usually define as "rich" when they're trying to raise taxes.

Some states are using Schip to create universal child health programs, regardless of need. Governor Rod Blagojevich recently expanded the Illinois Schip program to insure all children, with premiums and co-pays based on parental income. Pennsylvania's "Cover All Kids" and Tennessee's "Cover Kids" programs do the same.

As of February 2007, the Government Accountability Office found that 14 states were using Schip to cover adults: pregnant women, parents of Medicaid or Schip kids--and even childless adults. Arizona, Michigan, Minnesota and Wisconsin cover more adults than children. In 2005 Minnesota spent 92% of its grant insuring adults, and Arizona spent two-thirds the same way.

And no wonder: The Schip funding structure provides incentives for running over budget. In three-year periods, all unspent Schip allocations across the 50 states are tallied up and redistributed. A state that exceeds its allotment gets more money from a state that didn't. In the 14 states that went over budget in 2005, 55% of Schip recipients were adults.

We're all for federalism, and if states want to raise taxes to pay for government-run health care, they have every right. The problem is when they exploit federal policy loopholes to do so and thus stick taxpayers in more responsible states with a larger tab. In 2005, 28 states received an extra grant, either through redistribution or the feds picking up the check for overruns. Thus the federal government pays about 70% of total Schip outlays, despite the premise of "matching" state grants. A bill introduced by Senator Clinton and Representative John Dingell would make all of this worse. It would index government Schip outlays to national health spending and growth in states' child population. Without "quantifiable" progress--i.e., expanded rolls--funding drops. The legislation would also create incentives for states to expand Schip to the New York level of 400% of poverty. If this keeps up, a family will soon be eligible for Schip and subject to the Alternative Minimum Tax.

In other words, what began as a hard-cap grant to cover the working poor is evolving into an open-ended entitlement to cover whatever promises states make. And all under the political cover of helping "children." Instead of debating government-run health care on its merits, Democrats are building it step by step on the sly. Or as Mrs. Clinton put it in Nevada, "Make no mistake. This will be a series of steps."

There's a lesson here for Republicans, who agreed to create Schip in a trade for Mr. Clinton's signature on their "balanced budget." Balanced budgets vanish in the blink of an election, while entitlements like Schip live on and expand as an ever-larger claim on taxpayers. Mark this down as another case in which Bill Clinton outfoxed Newt Gingrich. The least Republicans can do now is work to return Schip to its original, more modest purposes.

Holman W. Jenkins Jr. is a member of the editorial board of The Wall Street Journal and writes editorials and the weekly Business World column.Mr. Jenkins joined the Journal in May 1992 as a writer for the editorial page in New York. In February 1994, he moved to Hong Kong as editor of The Asian Wall Street Journal's editorial page. He returned to the domestic Journal in December 1995 as a member of the paper's editorial board and was based in San Francisco. In April 1997, he returned to the Journal's New York office. Mr. Jenkins won a 1997 Gerald Loeb Award for distinguished business and financial coverage.Born in Philadelphia, Mr. Jenkins received a bachelor's degree from Hobart and William Smith Colleges in Geneva, N.Y. He received a master's degree in journalism from Northwestern University in Evanston, Ill., and studied at the University of Michigan on a journalism fellowship.

How goes the cold war? We refer to the never-ending twilight struggle between advocates of socialized medicine in America and those who believe economically competent Americans should be required to budget and save for their own health care, as they do for the rest of their personal consumption.

Any cold war wouldn't live up to its name and reputation if the two sides didn't occasionally change uniforms and borrow each other's rhetoric and tactics. But from a squinty angle, Republicans might just be winning this one.

The latest flashpoint is "Medicare Advantage," a GOP initiative to entice beneficiaries to sign up for a private insurance option in lieu of traditional Medicare's direct payment of doctor's and hospital's bills. More than eight million Medicare beneficiaries now get their benefits this way, about 20% of the eligible population. Democrats like Rep. Pete Stark of California are alarmed. They accuse Republicans of seeking to "privatize" Medicare, turning it into a voucher program to buy health insurance, with most of the subsidies restricted to needy seniors.

They're right.

Republicans like Rep. Jim McCrery respond that Democrats want to eliminate the private insurance option for Medicare and bring the country "one step closer to a socialist-style government-run health care system." He's right.

That's where clarity ends in the twilight struggle.

Notice, for starters, that Medicare Advantage is thriving because of deliberate subsidies, over and above the cost of existing Medicare, directed at private insurers. Taxpayers shell out about 12% more for each beneficiary than they do for a traditional Medicare subscriber -- worth about $922 year. The extra money buys extra benefits not available in the traditional program, as well as reduced copays and deductibles.

As they did with the big new Medicare drug benefit, Republicans have usurped Democrats' role as Santa Claus to the middle class. Health insurers, once reliable bad guys who elicited boos in movie theaters, have been reborn as giant government contractors. NAACP, once a reliable Democratic ally, now lobbies to keep subsidies flowing to private insurers, saying the extra benefits are a godsend to poor seniors.

It gets worse. AARP, the old folks lobby, has been turning itself into the insurance industry's marketing arm. It recently signed deals with two of the biggest insurers, UnitedHealth and Aetna, to sell AARP-branded insurance to the over-50 crowd, who will then be ripe to be rolled into AARP-branded Medicare plans when they hit 65.

Insurers have been losing corporate business as companies cut back on health benefits and shoo their employees into Health Savings Accounts. The industry increasingly looks to government to fill up their book of business. Result: a growing compatibility of interests between insurers and the senior lobby. AARP, for one, expects to earn $4.4 billion over six years by lending its name to plans peddled to seniors.

Even the universal access issue is slipping from Democratic grasp as Republican governors experiment with mandates requiring all citizens to have private insurance (with insurance lobbyists cheering on). And Democrats are being checkmated on the electoral map. According to Blue Cross, any attempt to cut back on Medicare Advantage would mean reduced benefits for 196,000 voters in Ohio, 196,000 in Pennsylvania, 180,000 in Michigan, etc.

So far, the counterstrategy has been pitiful, pitiful. Led by Hillary Clinton, Senate Democrats suddenly discovered an urgent need to expand spending on children's health care by $50 billion over five years -- a sum conveniently equal to Medicare Advantage's subsidy over the same period. Dutiful newspaper columnists peddled the predictable oldie-moldy: By resisting cuts in Medicare Advantage, Republicans are favoring insurance industry CEOs. Democrats favor children.

The fallacy here is obvious. All federal dollars are created equal. If more spending on children's health care is such a good idea, the federal budget is a cornucopia of programs to cut: farm price supports, ethanol subsidies, the homeland security boondoggle. And Democrats control the purse strings these days.

No wonder Mr. Stark, one of his party's authoritative voices on health care, laments the good old days when Democrats and Republicans had the same agenda for Medicare, expanding it while trying here and there to make it more efficient. "But in no circumstance did [Republicans] feel that we should disband Medicare and I think that is the principle difference," he complained late last year.

His nostalgia is touching, but omits a key fact. With an unfunded liability of $70.5 trillion in present value, business-as-usual for Medicare is not a practical agenda.

Quietly, means-testing is already arriving to sully the program's image as a universal entitlement, starting this year with seniors earning more than $80,000 a year. Quietly, Medicare's trustees, under a new law, have been required to declare their first "funding warning" because dedicated taxes and premiums will meet less than 55% of the program's costs within seven years.

Republicans, however convoluted and spendthrift, have a strategy -- turning Medicare into a welfare program for poor seniors. Democrats have only a feckless hope that if they stall long enough, the problems will be so bad that the American people will vote for a universal government-run health system. That strategy is already a loser, however long the war drags on.

Illinois Tax Implosion The political limits of "universal" health care.

Monday, May 14, 2007 12:01 a.m. EDT

"Universal" government health care has once again returned as a political cause, with many Democrats believing it's the key to White House victory in 2008. They might want to study last week's news from Illinois, where Democratic Governor Rod Blagojevich's tax increase to finance health care became the political rout of the year.

The Democratic House in Springfield killed the proposal, 107-0, after Mr. Blagojevich came out against his own idea when it became clear he was going to be humiliated. Only a month earlier he had said he was prepared to wage "the fight of the century" in defense of his plan to impose a $7.6 billion "gross receipts tax" on Illinois businesses.

Easily re-elected in November, the Governor used every trick in the "progressive" political playbook to sell his proposal. Instead of a general tax increase, he claimed it would be "targeted" for universal health care and education. Instead of raising individual taxes, he aimed at business and even built in an exemption for smaller firms. "These corporate guys, they can't avoid this tax," declared the Governor, sounding one of the "populist" themes that liberal columnists are now recommending for national Democrats.

Mr. Blagojevich also pitched his plan as a moral imperative, unveiling it while standing in the Fourth Presbyterian Church in Chicago and saying it was necessary to force businesses to pay their "fair" share of the tax burden. He wanted to force most employers to offer health insurance or pay a 3% payroll tax. Liberal special interest groups--including the state AFL-CIO and the Illinois Education Association--initially supported him.

But a funny thing happened on this road to Canadian health care. The state's more rational Democrats revolted, arguing it would drive businesses out of Illinois. Chicago Mayor Richard Daley was an early opponent, and Democratic Lieutenant Governor Patrick Quinn was cool to it. House Speaker Michael Madigan very publicly withheld his support and last week came out against the tax hike. As tax increases go, this was one of the worst. A "gross receipts tax" is popular with politicians because it applies to every dollar of company revenue, not merely on profits, or on final sales the way a retail sales tax does. But this means the tax tends to hit hardest those small and medium-sized businesses that have healthy sales volumes but narrow profit margins. The tax is a huge revenue-raiser but can also be a job killer.

Mr. Blagojevich tried to soften this impact by creating an exemption for business with annual revenues of less than $5 million. But even with that exemption, retailers would feel the squeeze from the higher cost of goods. And because the tax applies to all business transactions, it creates what economists call a "pyramiding" effect that has a damaging overall economic impact.

The Tax Foundation estimated that Mr. Blagojevich's proposal would have been the largest state tax hike in the last decade, as a share of state general fund revenue--at 27% nearly double the next closest, which was Nevada's 14% increase in 2004. In per capita terms, the tax hike would average about $550 per Illinois resident.

All of this piled on top of the $1.5 billion in new taxes and fees that the Governor imposed in his first term. State revenue has been rising at a respectable 5% annual pace, but spending is rising faster. Jonathan Williams of the Tax Foundation says the Governor's proposed budget this year calls for a 13.2% spending increase, which comes on top of a near double digit increase a year ago. The cumulative impact of this rising tax and spending burden has been to drive businesses out of the state.

"To describe every major CEO in Illinois as fat cats is a mistake," said Chicago Mayor Daley. "They don't have to be here. They can go to Wisconsin. They can go to Indiana. They can go to India. They can go to China. So if you want to beat up businesses, go beat 'em up, and when they leave, just wave to 'em and they're going to wave back to you." Even Jesse Jackson disowned the Governor's plan, noting that "We all want health care. But business closer is not good health."One lesson here is that it is far easier to talk about "progressive" political causes than to pay for them without doing larger economic harm. In today's global economy, the margin for policy mistakes is smaller, even for individual states. Mr. Daley may appreciate this better than Mr. Blagojevich because he knows the consequences of bad policy will harm Chicago long after the Governor retires to private equity, or some other "fat cat" job.

As for national Democrats, Presidential candidate John Edwards has already proposed a huge tax increase to pay for national health care. At least he's honest about what such promises require, but we doubt it will help his Presidential prospects. Illinois Senator Barack Obama has been silent on his Governor's tax implosion, but someone should get him on the record. And Hillary Clinton, well, we can't wait to see how "universal" her promises will be.

It's Friday evening and you suspect that your child might have strep throat or a worsening ear infection. Do you bundle him up and wait half the night in an emergency room? Or do you suffer through the weekend and hope that you can get an appointment with your pediatrician on Monday -- taking time off your job to drive across town for another wait in the doctor's office?

Every parent has faced this dilemma. But now there are new options, courtesy of the competitive marketplace. You might instead be able to take a quick trip on Friday night to a RediClinic in the nearby Wal-Mart or a MinuteClinic at CVS, where you will be seen by a nurse practitioner within 15 minutes, most likely getting a prescription that you can have filled right there. Cost of the visit? Generally between $40 and $60.

These new retail health clinics are opening in big box stores and local pharmacies around the country to treat common maladies at prices lower than a typical doctor's visit and much lower than the emergency room. No appointment necessary. Open daytime, evenings and weekends. Most take insurance.

Who needs magazines and crowded waiting rooms? Much like the response to Hurricane Katrina, private companies are far ahead of the government in answering Americans' needs, this time for more accessible and more affordable health care. Political leaders across the country seeking to expand government's role in health care should take note.

Thousands of free-standing primary care clinics have been operating for years in malls and main streets around the country, often staffed by physicians and many offering a broad range of health services. The retail health clinics are creating a new model with more limited services at lower prices and almost always staffed by nurses. The Convenient Care Association estimates there are about 325 of these retail clinics operating nationwide today. Seventy-six of them are in Wal-Marts in 12 states, but the company announced last month it will expand to 400 clinics by the end of the decade and 2,000 in five to seven years. They will be run by outside firms, including for-profit ventures like RediClinic as well as local and regional health plans and hospitals.

The industry is rapidly expanding. You can find a MinuteClinic in the CVS on the Strip in Las Vegas. But you also will find many locally-run clinics in pharmacies and food stores across America, such as the Express Clinic in Miami, MediMin in Phoenix, and Curaquick in Sioux City, whose motto is "Get well soon."

Prices vary for services from flu shots ($15-$30), to care for allergies, poison ivy and pink eye ($50-$60), and tests for cholesterol, diabetes and pregnancy (less than $50). Competition already is starting to drive prices down.

Of all patients who have visited the clinics, almost half went there for a vaccination, and one-third received treatment for ear infections, colds, strep throat, skin rashes or sinus infections. Ninety percent said they were satisfied with the care they received. The nurses staffing the clinics are under physician supervision and follow strict protocols to refer patients to physicians or emergency rooms if problems are more serious.

Internists and family doctors are watching. Some see the clinics as useful in providing efficient care for a limited number of uncomplicated ailments, freeing physicians and hospitals to deal with more complex cases. But others are worried about lost business, fragmentation of care, and the quality of care if the clinics miss something serious.

Rick Kellerman, president of the American Academy of Family Physicians, concedes, "The retail clinics are sending physicians a message that our current model of care is not always easy to access." The threat of competition from the in-store clinics means some doctors are keeping their practices open later and on Saturdays and holding an hour open for same-day appointments. Competition works.

And competition also worked to force prescription drug prices down: When Wal-Mart announced last year that it was dropping the price of several hundred generic medicines to $4 for a month's supply, other pharmacies, from Target to corner drug stores, followed suit. Wal-Mart now says that a third of all prescriptions filled at its pharmacies are for the $4 generics, and 30% of them are filled by people without insurance.

Take note, Congress: The market is providing cheaper medicines, more affordable care -- and it is also helping the uninsured. A Harris Interactive poll conducted in March for The Wall Street Journal said that 22% of those visiting the clinics were uninsured. Wal-Mart says that half of its clinic visitors are uninsured.

Retail clinics are particularly attractive to 4.5 million people with Health Savings Accounts who have health insurance with higher deductibles and want an affordable option for some of their routine care.

And the clinics are working to solve another problem that is vexing Washington -- creation of electronic medical records. Most retail clinics create computerized patient records, with the goal of making the records accessible throughout the chain. The records also can be emailed to a hospital or to the patient's regular doctor -- or sent by fax if necessary.

Critics of engaging private competition in the health sector will argue that the vast majority of health-care dollars are spent on a relatively small percentage of patients with serious illness, especially those with multiple chronic conditions.

But even coordination of care for those with chronic illnesses lends itself to patient-friendly solutions. The City of Asheville, North Carolina, cut its costs in half for employees with diabetes by teaming up with local pharmacists who did routine exams and got patients to their doctors or hospitals more quickly when they needed intervention. Employees received their medicines for free if they kept appointments, and their health improved.

Because health care is largely regulated and licensed at the state level, some states are more friendly than others at having non-physicians deliver care. California requires that clinics be a medical corporation owned by a physician. In Arizona, each site must be licensed, but in most other states, a single license will serve multiple clinics. Illinois is considering legislation to limit the number of nurses a doctor could supervise to two and restrict the clinics' right to advertise.

This industry is in its infancy and will hardly register in our nation's $2 trillion-plus health care bill. But just as Nucor overturned the steelmaking industry with a faster-better-cheaper way of making low-end rebar, these limited service clinics could be the disruptive innovator in our health-care system. Package pricing for more complex treatments, like knee replacement surgery, may not be far behind.

Government can get in the way, of course, with protectionist policies that throw up more regulatory barriers to entry. But retail clinics could be just the beginning of consumer-friendly innovations, if Congress were to change tax policies in a way that would allow people to have more control over their health spending, as President Bush has proposed.

The linchpin is giving people the same tax benefits whether they get their health insurance at work or on their own, or buy coverage through groups like churches, labor unions and professional or trade associations. Allowing people to buy health insurance across state lines would inject another dose of healthy competition into the system.

With many congressional leaders hostile to free-market solutions, these policy changes are unlikely in the next two years. But as consumers get a taste of what consumer-friendly health care is like, they may well demand that the top-down, centralized health-care delivery of the 20th century give way to a system more in tune with the demands of 21st-century consumers seeking greater value and efficiency.

The HillaryCare experiment ended badly in 1994, but Democrats are back in the universal health-care laboratory. All the party's major Presidential candidates have or will introduce plans, and last week Hillary Clinton presented the first part of hers. The former First Lady joked that she's "tangled with this issue before" and has "the scars to show for it." But the lesson she seems to have learned is political, not substantive--that is, make any plans for government control gauzy and incremental, not grandiose.

Mrs. Clinton will unroll her universal plan later this year; last week's speech focused on lowering health-care costs, which stand at $1.9 trillion for 2005. She says she can trim that by "at least" $120 billion. A big lump of that figure comes from digitizing and integrating medical records. Not a bad idea, probably: A 2005 RAND study suggests it could produce $77 billion in net savings a year with 90% adoption. Computerized record-keeping is so unobjectionable that it's also a pet issue of Newt Gingrich, among other Republicans.

Mrs. Clinton also nodded at medical malpractice reform. She neglected, however, to support the proposals that would actually reduce costs, such as punitive damage caps and specialized medical courts. These, not incidentally, are also the programs most vigorously opposed by the tort bar.

Her main thrust addressed prevention to reduce the incidence of diabetes, heart disease and other chronic conditions. Mrs. Clinton would do so by mandating that insurers re-orient their policies to cover prevention, at least when dealing with the federal government--no doubt with other mandates to follow.

This was only the first of Mrs. Clinton's promises to crack down on the "marketing and schemes" of the insurance industry. She decried companies, for instance, that "discriminate" against those with pre-existing conditions, and would require that "anyone" be allowed to join a plan, whenever. This is called "guaranteed issue"; it allows people to wait until they're sick before seeking insurance, making it less affordable for everyone else.

Guaranteed issue is precisely one of the mandates that makes insurance so expensive in states like Massachusetts, New York and New Jersey. Policies might be more affordable if the insurance market were deregulated; now, the market is balkanized by 50 separate sets of state regulations, inhibiting innovation and economies of scale. But for the Senator from New York, it's easier to blame nefarious business.

Mrs. Clinton also took some predictable swipes against the pharmaceutical companies for the cost of prescription drugs. She would allow Medicare to negotiate lower prices and allow for reimportation from foreign countries. These drugs, of course, are cheaper because foreign governments impose price controls on pharmaceuticals that mostly originated in the U.S.

The Senator also discussed at length her proposal to create a regulatory pathway for the approval of generic copies of biotechnology medicines. Not only is such a program shot through with serious scientific and intellectual-property concerns, but the best research indicates that the savings range for follow-on biologics falls between 5% and 13% over the original drugs. The U.S. spent $52.7 billion on biologics in 2005, so the potential savings are small while what Mrs. Clinton suggests could hamstring the most innovative medical sector.

Earlier this week, Senator Barack Obama offered his own full-dress plan, which promises to "provide coverage for all." The Presidential hopeful latched on to many of the same worn-out policy ideas as Mrs. Clinton--guaranteed issue, drug reimportation and more severe insurance regulation. As it turns out, though, Mr. Obama's program isn't necessarily universal. He would retain the private insurance system while creating a parallel public health plan based on the one currently available for federal employees; a sliding subsidy would be provided to those with lower incomes. The campaign says this will cost the federal government between $50 billion and $65 billion per year, and will be paid for by repealing the Bush tax cuts of 2001 and 2003.The Obama plan has been roughed up on the left because it doesn't mandate 100% coverage outright, aiming instead to cut down the number of uninsured. The John Edwards camp calls the program "simply inadequate." For his part, Mr. Edwards has offered a universal plan that would require businesses to cover their employees or else pay into a government fund to provide coverage; and he'd create a new, expanded federal entitlement program modeled after Medicare. Mr. Edwards estimates it will cost between $90 billion and $120 billion a year--and some experts say the price will be higher than that--which he proposes to fund by raising taxes. At least Mr. Edwards is somewhat honest about cost, as opposed to the free-lunchism of Mrs. Clinton and Mr. Obama. Put simply, a universal health-care system can't be financed with savings from computerized medical records.

What's most striking is that all these Democratic proposals spurn market reforms and the tax code, which is biased toward health spending. Because third-party businesses--but not individuals--can deduct health expenditures, the tax code insulates those with private insurance from the real costs of their treatment decisions and then prices uninsured Americans out of the market. Instead of aggrandizing more power to the government, changing this arrangement would devolve more control to patients and their doctors, and reduce overall spending as part of the bargain.

In any event, it will be interesting to see in the coming months how Mrs. Clinton negotiates what she calls "the moral imperative" to extend universal coverage to all Americans. Given that most of her proposals so far would raise, not lower, the cost of health care, she might want to go back to the drawing board.

When my Labrador retriever became acutely lame, we were able to locate a veterinary orthopedic expert in Atlanta within 48 hours who was able to repair a ruptured tendon within one week. But my prospects of identifying an endocrinologist who can care for my daughter's diabetes when she turns 18 are much less promising.

The limited number of endocrine specialists is a not a consequence of limited demand -- everyone is aware of the epidemic of diabetes we are facing. There are also shortages of generalists and other specialists, and the reason is the absence of market signals -- i.e., market-based prices -- for influencing the supply of physicians in various specialties.

The roots of this problem lay in the use of administrative pricing structures in medicine. The way prices are set in health care already distorts the appropriate allocation of efforts and resources in health care today. Unfortunately, many of the suggested reforms of our health care system -- including the various plans for universal care, or universal insurance, or a single-payer system, that various policy makers and Democratic presidential candidates espouse -- rest on the same unsound foundations, and will produce more of the same.

The essential problem is this. The pricing of medical care in this country is either directly or indirectly dictated by Medicare; and Medicare uses an administrative formula which calculates "appropriate" prices based upon imperfect estimates and fudge factors. Rather than independently calculate prices, private insurers in this country almost universally use Medicare prices as a framework to negotiate payments, generally setting payments for services as a percentage of the Medicare fee structure.

Many if not most administratively determined prices fail to take into consideration supply and demand. Unlike prices set on the market, errors are not self-correcting. That is why, despite an expanding cohort of patients with diabetes, thyroid disease and other endocrine disorders, the number of people entering this field is actually dropping. Young physicians are accurately reading inappropriate price signals.

In their book, "The Turning Point," Soviet economists Nikolai Shmelev and Vladimir Popov focused on key factors which undermined the economy during the communist era. They concluded that Goskomtsen, the agency responsible for setting prices, was simply incapable of setting and tracking prices on the myriad of goods and services under its purview.

The failures they describe sound disturbingly similar to challenges to Medicare described by Paul Ginsburg in "When the Price Isn't Right: How inadvertent payment incentives drive medical care" (Health Affairs, August 2005). Assessments as to the accuracy of pricing is always difficult, time consuming, costly, and more often than not, methodologically flawed. No matter which formulas and variables are used at any given moment, the information derived will generally be inaccurate; it will either be wrong to start or will be applied in the wrong context, or become dated so rapidly it is of little use.

Many prices will be too high or too low, and political forces tend to keep inappropriate prices in place -- specialists in fields with excessive payments will resist cuts, and there will not be enough specialists in low-paid fields to become an effective counterlobby. New physicians will react to existing prices, and so the misallocation of human resources will be self-perpetuating.

Nevertheless, those who control public policy, and public policy debates, treat pricing as something trivial -- the concern of bourgeois shop keepers peddling trinkets. Yet the dilemma of administrative pricing causes problems for the allocation of resources today that would only be amplified if the U.S. moves toward even more government intervention in health care than already exists. Where do prices come from, how do we know when they are right? If the prices set are mistaken -- result in a mismatch of supply and demand -- how are they to be corrected if pricing decisions are made in a political (bureaucratic) arena, and by the market (supply and demand)? These questions cannot be wished away.

One important lesson of the 20th century is that, while markets are far from perfect, more choices are available when people are able to use free markets to interact with each other. Markets may not get the prices exactly correct all the time, but they are capable of self-correction, a capacity that has yet to be demonstrated by administrative pricing.

It tells you something when the supply of and demand for specialist veterinary care is so easily matched when the prices of these services are established on the market -- while shortages and oversupplies are common for human medical care when the prices of these services are set by administrators in the public sector. Will health-care reformers -- and American citizens -- get the message?

Dr. Swerlick is associate professor of dermatology at Emory University School of Medicine.

Socialized Medicine Showdown It's time for some GOP spine on health care.

WSJBY KIMBERLEY A. STRASSEL Friday, June 29, 2007 12:01 a.m. EDT

While most of Congress scrapped over immigration this week, a small band of Republicans doggedly toiled behind the scenes on quite a different subject. National Economic Council Director Al Hubbard and health secretary Mike Leavitt shuttled to and from the Hill; Senators hashed out the topic at a steering committee lunch; congressmen canvassed members, wrote and wrote legislation. Even President Bush gave a speech on the subject, exhorting his party to get it together.

The result--if Republicans know what's good for them--may be a broad new GOP health-care vision, a free-market reform to replace today's faltering employer-based system. The party has circled this for years, throwing out free-market ideas here and there, yet never proved unified (or brave) enough to get behind one bold, top-to-bottom reform. Democrats are now forcing their hand.

The setting is the upcoming debate over the State Children's Health Insurance Program, or Schip, a brawl that could well determine the future direction of U.S. health care. Democrats see expanding Schip as the first step toward socialized medicine. If Republicans fail to meet that challenge with their own more compelling plan for market-based, consumer-driven reform, it may prove the beginning of the end of today's private model.

If that sounds dramatic, consider the Democrats' strategy. The left still bears the wounds of HillaryCare, and knows that even with spiraling health-care costs, the nation still has little appetite for an abrupt shift to all-government care. So they've developed a craftier approach, one that takes longer but gets them to the same end.

The new plot is to enact national health care one citizen at a time, slowly expanding the reach of existing government programs until they encompass the population.

Schip is the first step. The program, with its $25 billion budget, was originally designed to provide insurance to only the poorest children. Democrats want to throw an additional $60 billion at it, expanding Schip's rolls by three million. They would expand eligibility so much that as many as half joining would drop private insurance to do so. Even adults could sign up. Next: Even as Democrats work to expand Schip to cover older Americans, they'd expand Medicare to cover younger Americans. House Energy and Commerce Committee Chairman John Dingell is said to have recently floated the idea of allowing the struggling Big Three auto makers to enroll workers in Medicare at the age of 55, or 10 years early. Consider this a pilot program for dropping Medicare's age limit overall and instantly subjecting tens of millions more Baby Boomers to the government's tender care.

Democrats will meanwhile argue the only way to pay for Schip and other expanded programs is to gut Medicare Advantage and similar free-market reforms. See how clever? Swallow up ever more Americans into federal programs, banish any last vestiges of popular market plans, and voilà! It is Hillarycare! Only nobody ever had to use the dreaded word!

Republicans beat back the original HillaryCare by warning about Canadian waiting lines, but a negative message alone won't do this time. Our third-party-payer system, while still stacks better than France, is nonetheless collapsing--and Americans know it. Republicans can't simply be against socialized care, while not being for anything else. The left also chose its first battle wisely, with a program for "the children." The GOP's only Schip response so far has been to grouse about cost. And it's realizing a message of "We're for the children, just not as much as them," isn't a political winner.

This week's backroom talks--led by health-care innovators Tom Coburn and Jim DeMint in the Senate, and Paul Ryan and Jim McCrery in the House--were therefore about getting beyond Schip. The goal: a system that eliminates today's corporate subsidy and gives the money to individuals, cutting costs and reducing the number of uninsured. The political message: Dems want to put a few million more under government control for $60 billion, Republicans want to put 300 million in charge of their own care at zero extra cost.

The good news is that after 10 years of tinkering, Republicans have laid the foundation for bigger reform, from Health Savings Accounts to tort liability reform. The more intense policy debate this week instead focused on the biggie: how to revamp the tax code to get that money to individuals. On one side are tax wonks, among them Sen. Jon Kyl, who prefer giving every American a tax deduction--as President Bush has advocated. They argue it does the least damage to the tax code, and is less of a handout. On the other side are health-care wonks, among them Sen. Coburn, who prefer a refundable tax credit. They argue it does more to help with the uninsured, and is coincidentally a better political sell.

By the end of this week, the architects were coalescing around a tax-credit approach, on the belief it will attract the most GOP support. In a signal of White House approval, President Bush deliberately noted in his speech Wednesday that a tax credit would have a "similar outcome" to his deduction plan, and that he was "open to further discussion." Word was that Republican leaders were also climbing on board, with all concerned hoping to debut something big in coming weeks. The challenge then will be to get the rest of the party to overcome its nervelessness on health care. The ringleaders of today's effort admit they may have to do a Sen. Phil Gramm, who in 1993 led by example, singlehandedly tearing into HillaryCare, proving his position a winner with voters, and pulling his colleagues in line.

They'll need to roll up their sleeves. Most Republicans don't understand health care, so don't want to talk about it; many grimace at voting down money for "kids"; quite a few face tough elections and would rather not jump into an unknown debate. Reformers also aren't getting cover from should-be allies. Insurers and lobby groups like PHRMA--who ought to understand that a bigger Schip is a threat to their long-term business--are instead focused on short-term profits and PR images. Republican governors--who'd be huge beneficiaries of an individualized market--seem to only care about keeping federal dollars flowing into state coffers.

Democrats will hail a Schip victory as an example of how they can help Americans on their top concern of health care. They want to ride it to the White House and to bigger congressional majorities, making it that much easier to institute incremental national health care. If Republicans don't unify now, they might not get a better chance.

Ms. Strassel is a member of The Wall Street Journal's editorial board, based in Washington. Her column appears Fridays.

After years of campaigning, activists have narrowed the debate about health care in poor countries to a single premise: Patents drive up the cost of medicines, so patents are bad. Today this fallacy will gain a degree of institutional legitimacy as the European Parliament debates ways to undermine global intellectual property rules.

A handful of MEPs propose that the EU encourage governments in poor countries to issue "compulsory licenses" for patented medicines, revoking the patents and attendant rights -- such as collecting royalties -- that had been granted to a drug maker. The lawmakers also want the EU to exclude intellectual property rights (IPR) clauses from any future trade agreements signed with African, Caribbean and Pacific countries. Such a move would not only harm European pharmaceutical firms, but distract attention from the real causes of ill health in poor countries.

Thailand got this ball rolling. The interim military government there recently issued a number of compulsory licenses, citing flexibilities in the World Trade Organization's Trade Related Aspects of Intellectual Property Rights agreement, or TRIPS. The junta claimed that the prices of these drugs made it impossible to provide universal access to medicines for the Thai people.

The political brouhaha that followed took all eyes off the thing that mattered most: the state of the Thai health-care system, which was suffering from hospital closures and staffing shortages. Without hospitals and doctors, cheap drugs will do little good.

The problem with the Thai health system isn't money; vast amounts of aid are already on offer. The problem is bad governance and corruption. For example, the Global Fund awarded Thailand $133 million to manufacture its locally produced HIV/AIDS therapy, called GPO-VIR. Four years later, the money was withdrawn because the state drug maker failed to meet international standards.

Others have trodden this road. From 1972 India weakened its IP laws in hopes of driving down medicine prices. It certainly made some drugs less expensive, but it hasn't made Indians any healthier. Access to even basic medicines in India remains unacceptably low. Children go without routine vaccinations. Simple generic anti-infectives are out of reach of the majority of the rural poor.

This goes right to the heart of the medicine-access debate for Africa, too. In 2006, the director of the World Health Organization's HIV Division, Kevin De Cock, said "it is very obvious that the elephant in the room is not the current price of drugs. The real obstacle is the fragility of the health systems. You have health infrastructure that is dilapidated, and supply chains that don't exist."

If African health-care systems are to improve in a sustainable way, it is vital for their economies to grow. Today's European Parliament debate falls short here as well. MEPs are being urged not only to scrap IPR commitments from trade agreements with poor countries but, in some cases, to scrap free-trade agreements altogether.

That would be counterproductive in two obvious ways. First, tearing up these deals would undermine one of the best chances for economic growth these regions have. Second, IPR are a crucial guarantee that patients in poor countries will get high-quality, effective medicines. Many generic-drug manufacturers in countries with weak IP rights -- particularly India -- are reluctant to invest the money needed to bring their factories to international standards. Drugs that do not meet these stringent standards are likely to encourage mutated, drug-resistant strains of disease, which is particularly damaging for malaria or HIV/AIDS patients.

Emasculating TRIPS might allow the MEPs to stick it to Big Pharma, but it takes energy away from the things that really matter: infrastructure, doctors, nurses. Unless poor nations get these, we will still be having this debate in four decades' time.

Mr. van Gelder is network director, and Mr. Stevens health program director, at International Policy Network.

What do you call a surgeon who wears a suit? A defendant. It's an old joke, but at any given moment in the U.S., approximately 60,000 medical malpractice suits are being tried, many involving multiple physician-defendants. That's roughly 10% of the physician population. And once a physician experiences the legal system, it can scar him permanently.

It's not hard to see why. Though the medical tort system is designed to deter unsafe practices and to make negligently injured patients whole, it does neither. Nor does it prevent a high frequency of frivolous lawsuits.

In response, doctors and medical associations have sought relief from lawsuits for years by trying to get tort reform passed at the state and federal levels. Such reforms have solved some problems, but often at the expense of exacerbating others.

For example, while some states have enacted reforms which limit certain types of damages to plaintiffs, this has done little to stem the tide of frivolous law suits. In California -- the tort reform poster child -- an obstetrician will pay $30,000 to $50,000 annually in liability premiums, as compared to the $170,000 obstetricians might pay in certain areas of New York. Yet doctors are actually sued more often in California than in other states, in part because tort lawyers have sought to compensate for decreased payments by pursuing a greater number of claims.

Another tort reform "success story" is Louisiana. The state's dominant malpractice insurer recently reported it spent more money on defending claims than on settlements and judgments. Why? Because Louisiana mandates the use of a screening panel before a lawsuit is filed. Annually, for every three physicians, one claim is made to the panel (a claim frequency that is among the highest in the country). The winner, usually the physician, is forced to pay the cost of the panel. So, the winner does not really win. He just loses less.

In 2002, we launched Medical Justice, a membership-based organization designed to complement tort reform and to head off frivolous lawsuits. Medical Justice pays the bills and provides the services to file countersuits against all proponents of meritless lawsuits.

Our service has two principal components. First, we look at the quality of so-called expert-witness testimony. Behind every frivolous lawsuit there is an "expert" -- usually a physician skilled in testifying before juries and often compensated to the tune of $10,000 dollars a day. Put bluntly, many of these "experts" are frauds, as this newspaper has repeatedly shown in cases regarding asbestosis and silicosis claims.

In a recent case we dealt with, an expert witness detailed how a urologist had botched a vasectomy, even though routine postoperative sperm counts were, as expected, zero. Nonetheless, the patient's wife became pregnant.

A lawsuit gathered momentum based on an expert supporting the least likely hypothesis: surgical error. To almost no one's surprise, a paternity test performed many months later solved this elementary mystery, and the case was dropped. But the urologist took little comfort in being exonerated. Too little. Too Late.

Medical Justice deals with the problem of frivolous or dishonest expert witness testimony by relying on the 2001 case, Austin v. American Association of Neurological Surgeons. There, the Seventh Circuit Court of Appeals upheld the right of medical specialty societies to police their own members. Many of these societies have panels to review the quality of med-mal testimony. If an expert's testimony is contrary to what a majority or respectable minority in the field would state, that record may translate into an ethical violation, potentially leading to discipline or even expulsion. Such discipline diminishes an expert's credibility in future cases.

Medical Justice's second tool is a patient-physician contract. That contract states that in a legitimate dispute, both sides will utilize only those experts who belong to such societies and who strictly follow their code of ethics. This limits the list to reputable and accountable physician experts, thus precluding the use of hired guns or medical "witnesses having other rational explanations" -- better known by their acronym.

By using contract law to define and enforce reasonable rules, the courtroom becomes less dramatic and more truthful. Virtually all of our patients have been comfortable signing this contract and participating in this process.

Does it work? Yes. After five years of collecting data, we know that Medical Justice plan members are sued at a rate of under just 2% a year. The average doctor is sued at a rate of 8%-12% per year. And the company is top heavy with physicians in "high-risk" specialties.

Further, when meritless cases are filed against plan members, generally they're dropped quickly. In Ohio for example, most "intent to sue" letters historically evolved into lawsuits. When a Medical Justice plan member receives an "intent to sue" letter, the plaintiff's attorney is notified that the defendant has the will and the funds to countersue. The result is that only 20% of the letters mature into bona fide lawsuits.

Finally, the system works because we back our words with deeds by taking action against proponents of frivolous suits. In a sense, Medical Justice has created a contract-based "loser-pays" paradigm. We have helped over a thousand physicians who are tired of being victimized by a system that doesn't prevent collateral damage.

None of this is to say that we don't have a real and sizable problem in this country with patients who are negligently injured, or who die on account of preventable medical errors in the course of their medical treatment. But we can't begin to adequately address the problem of patient safety until we clear the dockets and cut the costs which are wasted on meritless claims and the much larger derivative costs of defensive medicine.

Our legislators have tried and been unable to solve these larger problems. Micromanaging tort reform has proven to be little more than a game of legal whack-a-mole. It's time we give private initiatives a chance to work.

Dr. Segal, a neurosurgeon, is the founder and CEO of Medical Justice Services. Mr. Sacopulos is its general counsel.

When Louis Brandeis praised the 50 states as "laboratories of democracy," he didn't claim that every policy experiment would work. So we hope the eyes of America will turn to Wisconsin, and the effort by Madison Democrats to make that "progressive" state a Petri dish for government-run health care.

This exercise is especially instructive, because it reveals where the "single-payer," universal coverage folks end up. Democrats who run the Wisconsin Senate have dropped the Washington pretense of incremental health-care reform and moved directly to passing a plan to insure every resident under the age of 65 in the state. And, wow, is "free" health care expensive. The plan would cost an estimated $15.2 billion, or $3 billion more than the state currently collects in all income, sales and corporate income taxes. It represents an average of $510 a month in higher taxes for every Wisconsin worker.

Employees and businesses would pay for the plan by sharing the cost of a new 14.5% employment tax on wages. Wisconsin businesses would have to compete with out-of-state businesses and foreign rivals while shouldering a 29.8% combined federal-state payroll tax, nearly double the 15.3% payroll tax paid by non-Wisconsin firms for Social Security and Medicare combined.

This employment tax is on top of the $1 billion grab bag of other levies that Democratic Governor Jim Doyle proposed and the tax-happy Senate has also approved, including a $1.25 a pack increase in the cigarette tax, a 10% hike in the corporate tax, and new fees on cars, trucks, hospitals, real estate transactions, oil companies and dry cleaners. In all, the tax burden in the Badger State could rise to 20% of family income, which is slightly more than the average federal tax burden. "At least federal taxes pay for an Army and Navy," quips R.J. Pirlot of the Wisconsin Manufacturers and Commerce business lobby.

As if that's not enough, the health plan includes a tax escalator clause allowing an additional 1.5 percentage point payroll tax to finance higher outlays in the future. This could bring the payroll tax to 16%. One reason to expect costs to soar is that the state may become a mecca for the unemployed, uninsured and sick from all over North America. The legislation doesn't require that you have a job in Wisconsin to qualify, merely that you live in the state for at least 12 months. Cheesehead nation could expect to attract health-care free-riders while losing productive workers who leave for less-taxing climes.

Proponents use the familiar argument for national health care that this will save money (about $1.8 billion a year) through efficiency gains by eliminating the administrative costs of private insurance. And unions and some big businesses with rich union health plans are only too happy to dump these liabilities onto the government. But those costs won't vanish; they'll merely shift to all taxpayers and businesses. Small employers that can't afford to provide insurance would see their employment costs rise by thousands of dollars per worker, while those that now provide a basic health insurance plan would have to pay $400 to $500 a year more per employee.

The plan is also openly hostile to market incentives that contain costs. Private companies are making modest progress in sweating out health-care inflation by making patients more cost-conscious through increased copayments, health savings accounts, and incentives for wellness. The Wisconsin program moves in the opposite direction: It reduces out-of-pocket copayments, bars money-saving HSA plans, and increases the number of mandated medical services covered under the plan.

So where will savings come from? Where they always do in any government plan: Rationing via price controls and, as costs rise, waiting periods and coverage restrictions. This is Michael Moore's medical dream state.

The last line of defense against this plan are the Republicans who run the Wisconsin House. So far they've been unified and they recently voted the Senate plan down. Democrats are now planning to take their ideas to the voters in legislative races next year, and that's a debate Wisconsinites should look forward to. At least Wisconsin Democrats are admitting how much it will cost Americans to pay for government-run health care. Would that Washington Democrats were as forthright.

There aren't many issues in Washington that everyone can agree on these days. But here's one: Our health-care system needs serious reform.

Deciphering the forms you get when you take your child to the doctor is very difficult. Small business owners who provide health insurance for their employees struggle to afford skyrocketing costs. Many communities don't have a single practicing ob-gyn because the risk of lawsuits has run them out of town.

The problems are clear, yet there is great disagreement about what to do about them. What we need is an honest look at what's right with our health-care system, what's wrong with it and what we can do to improve it.

Let's start with what's right. America's private system of medicine is the world's finest. It taps into the efficiency and flexibility of competition and markets. It puts doctors and patients in charge -- not government. It gives us the world's most talented doctors and nurses, the most advanced hospitals and the most promising medical research. Americans with access to this system receive outstanding care -- and people from around the world come here to benefit from it.

Of course, there's also a big problem. Access to high quality private health care is getting so expensive that many can't afford it. Growing numbers of Americans depend on the government for coverage. That creates a bureaucratic maze for them, and weakens the system of private medicine for all. As President Bush summed it up recently: "America's health care is too costly, it's too confusing, it leaves too many people uninsured."

So how do we fix the system? The president agrees with the many members of Congress -- Democratic and Republican -- who believe we have an obligation to ensure that poor kids have health insurance. The State Children's Health Insurance Program (Schip) has been covering poor kids for 10 years and now is up for reauthorization. The president supports reauthorization, his budget boosts funding for poor children in Schip, and he is prepared to sign a bill with appropriate funding increases.

The president differs from some in Congress on how to cover children in middle-class families and other Americans. For example, one bill, sponsored by Sens. Max Baucus (D., Mont.) and Charles Grassley (R., Iowa), would expand Schip dramatically beyond what it is intended to do. And it would be a dangerous step down the path of government-run health care, ultimately resulting in fewer options and lower quality care for American families.

The Baucus-Grassley proposal would expand Schip to cover many children who are not actually poor. A family of four making $82,600 would be eligible for taxpayer-funded health insurance.

It would also cause many people to drop their good private coverage and move to taxpayer-funded, government-run health care. In fact, the Congressional Budget Office has estimated that for every two people who would join Schip under this bill, one would drop his/her private health insurance -- a striking example of "crowd-out" that is contrary to the purpose of the program.

Finally, this bill would run up a huge tab -- $71 billion over 10 years -- and would impose new tobacco taxes to pay for it. But even a large tax hike won't pay for this bill's vast expansion of the Schip program. Instead, the bill resorts to a massive budget gimmick to hide its true costs. This trick makes it appear that Schip's costs under this legislation will steadily increase from $5 billion this year to $16 billion in 2012 and will then suddenly drop to $3.5 billion a year -- a steep fall that won't happen of course because millions of kids would lose coverage.

In short, the Baucus-Grassley bill would weaken the part of American health care that is working well -- our private system of medicine -- while doing little to address the real problem for most Americans, which is the cost of care.

If Congress really wants to talk about reforming American health care and getting more people covered, there is a smarter way -- a way to build on the strengths of our private system while addressing its shortcomings. And it starts with addressing one of the root causes of the problems in health care -- the federal tax code.

The problem is straightforward: Under today's tax code, people who are fortunate enough to get health insurance through their jobs get a big tax break -- but those who have to buy coverage on their own get no tax break at all. That is not fair, and it is not wise. It makes it impossible for millions of Americans who work for small businesses or who are self-employed to afford health insurance. And it drives up the cost of coverage for us all.

So President Bush has proposed to level the playing field for health insurance. Under his plan, every family with private health coverage would receive a standard tax deduction of $15,000 -- no matter where they get their health insurance. This deduction would encourage more people to buy their own health insurance, just like the mortgage interest deduction encourages more people to buy their own homes. Some have suggested that a flat tax credit could also achieve the president's goal of leveling the playing field, and he has signaled that he would be open to that option.

These tax reforms are simple, but their effect would be revolutionary. More than 100 million people who are now covered by employer-provided insurance would see lower tax bills right away. Those who now purchase health insurance on their own would get a tax benefit for the first time. And millions of others who have no health insurance would be able to purchase private coverage.

To reduce the ranks of the uninsured even more, President Bush has also proposed to make federal help available to states that ensure all their citizens have access to basic private health insurance.

There are sharp contrasts between the president's plan to reform the tax code and the Baucus-Grassley proposal. Reforming the tax code would bring more affordable health insurance to 100 million Americans, while Baucus-Grassley will not change the cost of coverage for most people. Reforming the tax code would reduce the ranks of the uninsured by as many as 20 million, while Baucus-Grassley would cut the uninsured by fewer than four million. And reforming the tax code would achieve these goals without increasing taxes, while Baucus-Grassley would mean more taxes, more spending and more control for federal bureaucrats in Washington.

For taxpayers, families, patients and businesses, the choice is clear. Therefore President Bush will continue to work with members of both parties for reforms that make health care more affordable and more available for all Americans while continuing to support Schip for poor kids.

Mr. Hubbard is assistant to the president for economic policy and director of the National Economic Council.

"There’s absolutely no mystery why our greatest complaints are in the arena of government-delivered services and the fewest in market-delivered services. In the market, there are the ruthless forces of profit, loss and bankruptcy that make producers accountable to us. In the arena of government-delivered services, there’s no such accountability... Our health care system is hampered by government intervention, and the solution is not more government intervention but less... Before we buy into single-payer health care systems like Canada’s and the United Kingdom’s, we might want to do a bit of research. The Vancouver, British Columbia-based Fraser Institute annually publishes ‘Waiting Your Turn.’ Its 2006 edition gives waiting times, by treatments, from a person’s referral by a general practitioner to treatment by a specialist. The shortest waiting time was for oncology (4.9 weeks). The longest waiting time was for orthopedic surgery (40.3 weeks), followed by plastic surgery (35.4 weeks) and neurosurgery (31.7 weeks). As reported in the June 28 National Center for Policy Analysis’ ‘Daily Policy Digest,’ Britain’s Department of Health recently acknowledged that one in eight patients waits more than a year for surgery. France’s failed health care system resulted in the deaths of 13,000 people, mostly of dehydration, during the heat spell of 2003. Hospitals stopped answering the phones, and ambulance attendants told people to fend for themselves. I don’t think most Americans would like more socialized medicine in our country.” —Walter Williams, Economist------------------------------------------“Despite what our Democratic Party leadership would have us believe, the increasing costs and inaccessibility of health care is the result of excessive government interference in this market as opposed to not enough. You’d think that our representatives in Washington would want to fix these distortions so that health care could be delivered more freely and hence more cheaply, imaginatively and abundantly. But this doesn’t sit well with the political-power-loving class in Washington. It would rather do what the Senate Finance Committee has just done: Ignore the real problems and then expand government even more to try and cover those who fall through the cracks. As a result, we get Medicaid for middle-class America and children getting health care from different suppliers than their parents. Brilliant! [President] Bush offered a creative proposal in his State of the Union address this year that would start addressing the problem at its root. It puts a $15,000 ceiling on the deductibility of employer health coverage, and offers a $15,000 tax deduction to every American family to purchase health care. This would change current economics that favor plans delivered through employers rather than purchased individually. Yet, Rep. Pete Stark, D-Calif., who chairs the health subcommittee of the House Ways and Means Committee, declared the president’s proposal dead on arrival and said no hearings would be held. The proposal alone might not deliver gold-plated plans to working-class Americans. But it certainly would increase the accessibility of basic coverage.” —Star Parker

I use an "Urgent Care" clinic in my neighborhood. No appointment is necessary, the doctors are friendly and competent, and the prices far distinctly lower. This from today's WSJ=====================

Health Care When You Want ItBy WEB GOLINKINAugust 2, 2007; Page A11

Much of the recent debate about how to reform our inefficient, two trillion-dollar health-care system has revolved around who should pay, but the problem will not be fixed until we find ways to increase access and reduce costs that have been rising for many years at more than twice the rate of inflation.

One of the most promising developments is the emergence of retail-based "convenient care" clinics that are providing consumers with easier access to high-quality, routine health care at affordable prices. There are about 400 such clinics today and could be several thousand more in the next few years, but their growth is being threatened by burdensome regulations in some states and opposition from some corners of organized medicine.

Convenient care clinics are small health-care facilities with new brand names like RediClinic, MinuteClinic, and Take Care Health Clinics. Most are located in high-traffic retail outlets with pharmacies, such as Wal-Mart, CVS and Walgreen stores. Regional health-care systems have also opened retail-based clinics in their service areas, either directly or in partnerships with independent operators. These clinics generally are staffed by certified nurse practitioners who diagnose, treat and prescribe medications for a limited set of common ailments, such as strep throat and ear infections. They also administer health screenings, medical tests, immunizations, basic physical exams and other preventive care.

Convenient care clinics have been embraced by consumers, who give them consistently high marks for patient satisfaction: 97% of the more than 4,000 RediClinic patients surveyed this year said they would recommend RediClinic to their relatives and friends. This is because the clinics are delivering something that is all too rare in our system -- convenient and affordable health care.

The quality of care at convenient care clinics stems from their use of nationally certified nurse practitioners, who are registered nurses with master's degrees or comparable advanced training. Research over the past 30 years has consistently shown that the primary care provided by nurse practitioners is comparable in quality to that provided by physicians, though nurse practitioners are still required to collaborate with local physicians in most states.

Patients who have conditions that are outside of convenient care clinics' limited scope of practice, or who need ongoing care, are referred to local physicians, and nurse practitioners use evidence-based treatment protocols and electronic medical-record systems to standardize care and facilitate continuity of care when other clinicians are involved. According to a recent study conducted by the RAND Corporation, Americans receive evidence-based care only 55% of the time at conventional health-care delivery outlets. MinuteClinic's recent analysis of 58,000 sore-throat cases seen at their clinics showed that the diagnosis and treatment conformed to evidence-based guidelines 99.15% of the time.

Convenience is assured through the location of the sites and the fact that they are open seven days a week, including extended hours on weekdays. No appointments are necessary, and visits take only about 15 minutes due to the clinics' limited set of services. The clinics' location in stores with pharmacies provides additional convenience because patients can go across the aisle to get their prescriptions filled rather than having to make separate trips for this purpose.

Treatment for most common ailments ranges from $40 to $70 and preventive services start as low as $15, significantly less than what most physicians, urgent care clinics or emergency rooms charge. Indeed, research shows that as many as 50% of the people who seek care at overburdened emergency rooms could be treated much less expensively in convenient care clinics. Prices are prominently displayed so patients know what they will pay before they are treated, and visits are covered by a growing number of insurance plans, including Medicare.

Applicable regulations vary by state. In some states they are already compatible with the goals of convenient care clinics to increase health-care access and affordability, or there are legislative efforts underway to make them more so. In other states, however, regulations discourage convenient care growth. They may prohibit the "corporate practice of medicine," which prevents non-professional operators from employing nurse practitioners or owning equity in the clinics, or unreasonably restrict the number of nurse practitioners that can be supervised by a physician.

In Texas, for example, a physician can supervise a maximum of only three nurse practitioners and the physician has to be on-site for 20% of the time a clinic is open, even though he or she is not treating patients. This needlessly increases the clinics' cost structure, which creates higher prices for consumers and third-party payers. Moreover, it unproductively ties up physicians who are in short supply and could be attending to patients with more serious conditions.

Although the medical community was suspicious of convenient care in the beginning, many physicians and professional organizations changed their view when they saw how rapidly consumers embraced the concept and how operators provide high-quality care within a limited scope of practice, treat many patients who do not have established physician relationships (an estimated 30% of all convenient care patients to date), and refer many others. The American Academy of Family Physicians, which represents more than 94,000 family practitioners, recognized that convenient care clinics were filling a need. Rather than opposing the clinics, it published standards of care that it suggested convenient care operators should follow. Operators gladly complied because they had been meeting or exceeding these standards. The Convenient Care Association, which represents more than 20 of the largest operators, subsequently published more stringent standards that their members are now required to meet.

Some physician organizations, however, including ones in Illinois and Massachusetts, are pushing for new regulations that would impede the growth of convenient care clinics through expensive permitting requirements (which physician practices do not have to face), further limitations on the number of nurse practitioners that an individual physician can supervise, and prohibitions against advertising that compares the fees of convenient care clinics with those of physicians. This is exactly the kind of price transparency our health-care system needs. In addition, the American Medical Association passed resolutions at its recent annual meeting that push for government intervention, legislation and other measures that could curtail the expansion of convenient care clinics.

Opposition to convenient care from some parts of the medical community is made under the pretext of wanting to ensure quality and continuity of care, which is a legitimate but thus far unfounded concern. But the opposition is also about wanting to maintain the status quo even in the face of rapidly escalating costs and a growing shortage of primary-care physicians.

While resistance to disruptive change is understandable, it does not diminish the fact that the status quo in health care is not working for millions of consumers and that it is economically unsustainable even if it were. Instead of opposing convenient care, physicians should be working collaboratively with operators -- as many physicians are today -- to fill the critical need that all Americans share for easier access to high-quality, affordable health care.

Mr. Golinkin is the president and CEO of RediClinic, LLC, one of the nation's largest convenient care providers, and is a director and co-founder of the Convenient Care Association

The Health Care Lies of Paul Krugman By Stuart Browning, Co-Director of Dead Meat January 4, 2006 --------------------------------------------------------------------------------Although I'm not an official member of the Krugman Truth Squad, New York Times editorial page columnist Paul Krugman churns out enough mendacity and innuendo to keep a truth army occupied - so I'm just getting around to doing my part in response to his November 7 column[1] in which he declares national health insurance the "obvious solution" to the problems in our health care system. Obvious, that is, if you accept Krugman's "facts" at face value:

Let's start with the fact that America's health care system spends more, for worse results, than that of any other advanced country. In 2002 the United States spent $5,267 per person on health care. Canada spent $2,931; Germany spent $2,817; Britain spent only $2,160. Yet the United States has lower life expectancy and higher infant mortality than any of these countries.

What Krugman doesn't say is that its easy to hold down health care costs if you do what Canada does: withhold medical treatment from sick and injured people. The U.S health care system could save billions of dollars if we drastically reduced the number of doctors, hospitals, outpatient clinics, medical devices and diagnostic machines available. If we followed Canada's lead, we would severely limit each surgeon's allotted hours in the operating room so that they couldn't perform too many surgeries. Americans would wait months and years for critical medical tests and treatments - many would suffer greatly, become crippled, addicted to painkillers, go blind or die while waiting - however, the country would spend a lot less money on health care.

Paying More For Less?

For heart disease, cancer or any other serious health condition, there's no better place to be than the United States where more modern medical technology and expertise are available and accessible than anywhere else in the world. However, Krugman insists that the U.S is paying more than other countries and getting less health care as evidenced by 1) lower life expectancies and 2) higher infant mortality rates.

There are many factors that determine life expectancy averages and infant mortality rates which are beyond the control of the health care system. These include ethnicity, genetics, lifestyle, environment, education and cultural attitudes. In one column[2], Krugman does attempt to inoculate himself with some well-chosen weasel words:

It would be wrong to jump to the conclusion that this poor performance is entirely the result of a defective health care system; social factors, notably America's high poverty rate, surely play a role. Still, it seems puzzling that we spend so much, with so little return. Well, yes "it would be wrong to jump to this conclusion" - however that's precisely what Krugman does - and what's really "puzzling" is that Krugman never offers any other proof for his assertion that we pay more and get less. In column after column, he monotonously cites these two statistics as clear evidence of the failings of American health care without offering any argument that an alternate health care financing method would make any improvement in these areas.

Life Expectancy Averages

While it may seem counterintuitive, there is very little correlation between the quality of a health care system and life expectancy averages. Many people die before encountering the health care system. Others would die prematurely regardless of the system - while some would live to a ripe old age anyway. Blacks have shorter life expectancies than whites, hispanics or asians. The black population of Canada is numerically insignificant while black Americans make up 13% of the U.S. population. Japanese females have the longest life-spans of all - regardless of whether they live in Japan or in America - i.e. regardless of the health care system they live under[3]. Thus, a good way for a country to raise the life expectancy average would be to import females of Japanese descent!

Instead of basing broad conclusions about the quality of the U.S. health care system on unreliable indicators - as Krugman does - why not judge our system by how well it prevents deaths from cancer, heart disease and other conditions that modern medicine can actually treat? Well, because the U.S. is better at these things than other nations - and that's not part of Krugman's message.

Consider breast cancer. In the U.S., the mortality ratio - the percentage of people with the disease who die from it - is 25%. The breast cancer mortality ratios for Canada, the U.K. and New Zealand are 28%, 46% and 46%, respectively[4]. The U.S. prostate cancer mortality ratio is only 19%. In Canada, its 25%, in France, its 49% - and in the U.K., over half - 57% - of men diagnosed with prostate cancer die from it[5]!

Infant Mortality Rates

The primary reason that the U.S has higher infant mortality rates than other industrialized nations is that we experience a higher incidence of low-birth-weight babies due to demographic factors beyond the control of doctors and hospitals[6]:

Several factors are known to increase the likelihood of low-birth-weight babies, but the most significant is race. African American women deliver very small babies at twice the rate of white American women, This is true even when controlling for the mother's age, income and education. It is even true holding constant the number of prenatal medical visits. Why some ethnic groups have disproportionate numbers of low-birth-rate babies is not fully understood. Krugman's Choice: A "Single-Payer" Model

So which country's health care system does Krugman recommend [7] as a model for our own?

You guessed it:

Does this mean that the American way is wrong, and that we should switch to a Canadian-style single-payer system? Well, yes. Hundreds of thousands of Canadians are suffering and waiting long periods of time for medical care that, for the most part, is quickly available in the U.S. The Canadian press consistently reports outrageous stories detailing the callousness and inhumanity of a system which intentionally limits supply and rations health care to its citizens. Krugman, however, merely glosses over this inconvenient fact[8]:

Yes, Canada also has waiting lists, but they're much shorter than Britain's -- and Canadians overwhelmingly prefer their system to ours. Its hard to imagine that long-suffering Canadians would find solace in the notion that British citizens are suffering even more under their thoroughly socialized medical system (which rations care in much the same way as Canada) - and that this would somehow justify similar waits in the U.S. Similarly, Krugman's assertion that Canadians prefer their system to ours is laughable. Most Canadians have no idea how the U.S. health care system works. They've been fed a steady diet of Anti-American propaganda for more than twenty years to the point that there's a perception among many that poor and lower-middle-class Americans are literally dying in the streets after have been denied health care. Younger and healthier Canadians - who have never been really sick - boast of their "free" national health insurance and love the perception that they are getting something at someone else's expense. Many of them change their tune later in life when they find themselves on painfully long wait lists for diagnostic tests or surgery - while others have merely become accustomed to the idea that waiting months for an MRI or even years for orthopedic surgery is a normal feature of any health care system. Since they have little knowledge of the American system, they have nothing else to compare their experiences to.

The Trojan Horse

Under the government-run health care system that Krugman advocates, Americans would suffer and die while waiting for rationed health care just as the Canadians and the British do. By making health care "free" at the point of delivery and making government the payer for all medical transactions, the advocates of a "single-payer" system would reduce both the quantity and the quality of health care in this country - for everyone.

Its therefore, reasonable to ask if Krugman and his ilk have motivations other than promoting better and more available health care. Here's a hint[9]:

In the long run, medical progress may force us to make a harsh choice: if we don't want to become a society in which the rich get life-saving medical treatment and the rest of us don't, we'll have to pay much higher taxes. Apart from the patent dishonesty of the implication that only the rich get life-saving treatment in the U.S. - Krugman is finally getting to the point. By establishing the notion that everyone has an unlimited "right" to health care, the left has the perfect trojan horse to effect confiscation of private wealth in this country on a large scale. References:

We live in an age of unprecedented medical innovation. Unfortunately, most of today's cutting-edge research is conducted outside Europe, which was once a pioneer in this field. About 78% of global biotechnology research funds are spent in the U.S., compared to just 16% in Europe. Americans therefore have better access to modern drugs. One result is that in the U.S., the annual death rate from cancer is 196 per 100,000 people, compared to 235 in Britain, 244 in France, 270 in Italy and 273 in Germany.

It is both a tragedy and an embarrassment that Europe hasn't kept up with the U.S. in saving and improving lives. What's to blame? The Continent's misguided policies and state-run health-care systems. The reasons vary from country to country, but broadly speaking, the custodians of public health budgets aren't devoting the necessary resources to get patients the most modern and advanced medicines, and are happier with the status quo. We often see news headlines about promising new cures and vaccines next to headlines about patients who can't get life-saving drugs as politicians impose ever stricter prescription controls on doctors.

The human toll can be measured in deaths and unnecessary suffering. It also costs us a lot of money. Prevention is cheaper than treatment. Modern medicine can prevent many medical complications that would otherwise require hospitalization and other expensive care. For every euro spent on new medicine, national health-care systems could save as much as €3.65 in later treatments, according to a National Bureau of Economic Research study.

This situation is especially dire in Italy. The government has capped spending on pharmaceuticals at 13% of total health-care expenditures while letting expenses for infrastructure and staff skyrocket. From 2001 to 2005, general health expenses in Italy grew by 31% while expenditure on medicines increased a mere 1.7%. Italian patients might well have been better off if the reverse was the case, but the state bureaucrats who make these decisions refuse to acknowledge the benefits of advanced drugs.

Also as a result, pharmaceutical research in Italy is falling behind even faster than in the rest of Europe. In 2004, pharmaceutical R&D spending was €3.9 billion in Germany, €3.95 billion in France and €4.78 billion in Britain, compared to only €1.01 billion in Italy.

Part of the problem is that regional authorities manage most of Italy's health-care spending. A strike by health-care personnel has an immediate impact on the region, but the consequences of cutting the budget for medicines are only felt in the long term and distributed across the nation. Hence, local authorities continue to focus on personnel and infrastructure in an age when medical research has become the most efficient way to improve public health.

Most recently, some Italian regions decided to drastically expand the scope of reference pricing, in open defiance of the central government. Reference pricing is used in most European countries to reduce government spending on medicine and is one of the reasons the Continent is lagging behind in pharmaceutical research. New drugs are grouped with existing drugs used to treat the same medical condition, and the government typically limits reimbursement to the cheapest price in the reference group. This way, patients are discouraged from using the most modern and more expensive medicine.

The Italian regions, however, are taking reference pricing one step further by grouping together drugs that do not necessarily have identical therapeutic effects. This way, the reference groups grow larger, and the regions can save more money. But patients are forced to choose between paying high out-of-pocket expenses or the risk of taking the wrong medicine.

This is a tragic state of affairs in a country with a higher natural demand for advanced medicine than most others in Europe. The older people get, the more likely they are to get ill, and today 20% of Italians are 65 years of age or older -- by far the largest percentage of any European country. The proportion is projected to rise to 24.5% by 2020.

Italian leaders have a responsibility to prevent parochialism from undermining public health and pharmaceutical research. But it is worth repeating that the combination of an aging population and an inefficient health-care system is a European, not exclusively Italian, problem.

It is time for politicians and regulators to confront our backward health-care systems and unleash the powers of medical research. Besides expanding drug budgets, European countries should work together to deregulate the pharmaceutical industry -- for instance, by speeding up the approval process for new drugs. The EU can better ensure that drug patents are adequately protected both in Europe and around the world against compulsory licensing and other infringements. Finally, we should give medical researchers tax incentives to slow the brain drain to the U.S. -- much like Ireland is attracting artists with favorable tax laws. We Europeans are getting older; we should be getting wiser, healthier and happier, too.

Mr. Capezzone is the president of the productivity committee of the Italian Chamber of Deputies.

The Ugly Truth About Canadian Health CareSocialized medicine has meant rationed care and lack of innovation. Small wonder Canadians are looking to the market.David GratzerSummer 2007

Mountain-bike enthusiast Suzanne Aucoin had to fight more than her Stage IV colon cancer. Her doctor suggested Erbitux—a proven cancer drug that targets cancer cells exclusively, unlike conventional chemotherapies that more crudely kill all fast-growing cells in the body—and Aucoin went to a clinic to begin treatment. But if Erbitux offered hope, Aucoin’s insurance didn’t: she received one inscrutable form letter after another, rejecting her claim for reimbursement. Yet another example of the callous hand of managed care, depriving someone of needed medical help, right? Guess again. Erbitux is standard treatment, covered by insurance companies—in the United States. Aucoin lives in Ontario, Canada.

When Aucoin appealed to an official ombudsman, the Ontario government claimed that her treatment was unproven and that she had gone to an unaccredited clinic. But the FDA in the U.S. had approved Erbitux, and her clinic was a cancer center affiliated with a prominent Catholic hospital in Buffalo. This January, the ombudsman ruled in Aucoin’s favor, awarding her the cost of treatment. She represents a dramatic new trend in Canadian health-care advocacy: finding the treatment you need in another country, and then fighting Canadian bureaucrats (and often suing) to get them to pick up the tab.

But if Canadians are looking to the United States for the care they need, Americans, ironically, are increasingly looking north for a viable health-care model. There’s no question that American health care, a mixture of private insurance and public programs, is a mess. Over the last five years, health-insurance premiums have more than doubled, leaving firms like General Motors on the brink of bankruptcy. Expensive health care has also hit workers in the pocketbook: it’s one of the reasons that median family income fell between 2000 and 2005 (despite a rise in overall labor costs). Health spending has surged past 16 percent of GDP. The number of uninsured Americans has risen, and even the insured seem dissatisfied. So it’s not surprising that some Americans think that solving the nation’s health-care woes may require adopting a Canadian-style single-payer system, in which the government finances and provides the care. Canadians, the seductive single-payer tune goes, not only spend less on health care; their health outcomes are better, too—life expectancy is longer, infant mortality lower.

Thus, Paul Krugman in the New York Times: “Does this mean that the American way is wrong, and that we should switch to a Canadian-style single-payer system? Well, yes.” Politicians like Hillary Clinton are on board; Michael Moore’s new documentary Sicko celebrates the virtues of Canada’s socialized health care; the National Coalition on Health Care, which includes big businesses like AT&T, recently endorsed a scheme to centralize major health decisions to a government committee; and big unions are questioning the tenets of employer-sponsored health insurance. Some are tempted. Not me.

I was once a believer in socialized medicine. I don’t want to overstate my case: growing up in Canada, I didn’t spend much time contemplating the nuances of health economics. I wanted to get into medical school—my mind brimmed with statistics on MCAT scores and admissions rates, not health spending. But as a Canadian, I had soaked up three things from my environment: a love of ice hockey; an ability to convert Celsius into Fahrenheit in my head; and the belief that government-run health care was truly compassionate. What I knew about American health care was unappealing: high expenses and lots of uninsured people. When HillaryCare shook Washington, I remember thinking that the Clintonistas were right.

My health-care prejudices crumbled not in the classroom but on the way to one. On a subzero Winnipeg morning in 1997, I cut across the hospital emergency room to shave a few minutes off my frigid commute. Swinging open the door, I stepped into a nightmare: the ER overflowed with elderly people on stretchers, waiting for admission. Some, it turned out, had waited five days. The air stank with sweat and urine. Right then, I began to reconsider everything that I thought I knew about Canadian health care. I soon discovered that the problems went well beyond overcrowded ERs. Patients had to wait for practically any diagnostic test or procedure, such as the man with persistent pain from a hernia operation whom we referred to a pain clinic—with a three-year wait list; or the woman needing a sleep study to diagnose what seemed like sleep apnea, who faced a two-year delay; or the woman with breast cancer who needed to wait four months for radiation therapy, when the standard of care was four weeks.

I decided to write about what I saw. By day, I attended classes and visited patients; at night, I worked on a book. Unfortunately, statistics on Canadian health care’s weaknesses were hard to come by, and even finding people willing to criticize the system was difficult, such was the emotional support that it then enjoyed. One family friend, diagnosed with cancer, was told to wait for potentially lifesaving chemotherapy. I called to see if I could write about his plight. Worried about repercussions, he asked me to change his name. A bit later, he asked if I could change his sex in the story, and maybe his town. Finally, he asked if I could change the illness, too.

My book’s thesis was simple: to contain rising costs, government-run health-care systems invariably restrict the health-care supply. Thus, at a time when Canada’s population was aging and needed more care, not less, cost-crunching bureaucrats had reduced the size of medical school classes, shuttered hospitals, and capped physician fees, resulting in hundreds of thousands of patients waiting for needed treatment—patients who suffered and, in some cases, died from the delays. The only solution, I concluded, was to move away from government command-and-control structures and toward a more market-oriented system. To capture Canadian health care’s growing crisis, I called my book Code Blue, the term used when a patient’s heart stops and hospital staff must leap into action to save him. Though I had a hard time finding a Canadian publisher, the book eventually came out in 1999 from a small imprint; it struck a nerve, going through five printings.

Nor were the problems I identified unique to Canada—they characterized all government-run health-care systems. Consider the recent British controversy over a cancer patient who tried to get an appointment with a specialist, only to have it canceled—48 times. More than 1 million Britons must wait for some type of care, with 200,000 in line for longer than six months. A while back, I toured a public hospital in Washington, D.C., with Tim Evans, a senior fellow at the Centre for the New Europe. The hospital was dark and dingy, but Evans observed that it was cleaner than anything in his native England. In France, the supply of doctors is so limited that during an August 2003 heat wave—when many doctors were on vacation and hospitals were stretched beyond capacity—15,000 elderly citizens died. Across Europe, state-of-the-art drugs aren’t available. And so on.

But single-payer systems—confronting dirty hospitals, long waiting lists, and substandard treatment—are starting to crack. Today my book wouldn’t seem so provocative to Canadians, whose views on public health care are much less rosy than they were even a few years ago. Canadian newspapers are now filled with stories of people frustrated by long delays for care:

vow broken on cancer wait times: most hospitals across canada fail to meet ottawa’s four-week guideline for radiation patients wait as p.e.t. scans used in animal experiments back patients waiting years for treatment: study the doctor is . . . outAs if a taboo had lifted, government statistics on the health-care system’s problems are suddenly available. In fact, government researchers have provided the best data on the doctor shortage, noting, for example, that more than 1.5 million Ontarians (or 12 percent of that province’s population) can’t find family physicians. Health officials in one Nova Scotia community actually resorted to a lottery to determine who’d get a doctor’s appointment.

Dr. Jacques Chaoulli is at the center of this changing health-care scene. Standing at about five and a half feet and soft-spoken, he doesn’t seem imposing. But this accidental revolutionary has turned Canadian health care on its head. In the 1990s, recognizing the growing crisis of socialized care, Chaoulli organized a private Quebec practice—patients called him, he made house calls, and then he directly billed his patients. The local health board cried foul and began fining him. The legal status of private practice in Canada remained murky, but billing patients, rather than the government, was certainly illegal, and so was private insurance.

Chaoulli gave up his private practice but not the fight for private medicine. Trying to draw attention to Canada’s need for an alternative to government care, he began a hunger strike but quit after a month, famished but not famous. He wrote a couple of books on the topic, which sold dismally. He then came up with the idea of challenging the government in court. Because the lawyers whom he consulted dismissed the idea, he decided to make the legal case himself and enrolled in law school. He flunked out after a term. Undeterred, he found a sponsor for his legal fight (his father-in-law, who lives in Japan) and a patient to represent. Chaoulli went to court and lost. He appealed and lost again. He appealed all the way to the Supreme Court. And there—amazingly—he won.

Chaoulli was representing George Zeliotis, an elderly Montrealer forced to wait almost a year for a hip replacement. Zeliotis was in agony and taking high doses of opiates. Chaoulli maintained that the patient should have the right to pay for private health insurance and get treatment sooner. He based his argument on the Canadian equivalent of the Bill of Rights, as well as on the equivalent Quebec charter. The court hedged on the national question, but a majority agreed that Quebec’s charter did implicitly recognize such a right.

It’s hard to overstate the shock of the ruling. It caught the government completely off guard—officials had considered Chaoulli’s case so weak that they hadn’t bothered to prepare briefing notes for the prime minister in the event of his victory. The ruling wasn’t just shocking, moreover; it was potentially monumental, opening the way to more private medicine in Quebec. Though the prohibition against private insurance holds in the rest of the country for now, at least two people outside Quebec, armed with Chaoulli’s case as precedent, are taking their demand for private insurance to court.

Rick Baker helps people, and sometimes even saves lives. He describes a man who had a seizure and received a diagnosis of epilepsy. Dissatisfied with the opinion—he had no family history of epilepsy, but he did have constant headaches and nausea, which aren’t usually seen in the disorder—the man requested an MRI. The government told him that the wait would be four and a half months. So he went to Baker, who arranged to have the MRI done within 24 hours—and who, after the test discovered a brain tumor, arranged surgery within a few weeks.

Baker isn’t a neurosurgeon or even a doctor. He’s a medical broker, one member of a private sector that is rushing in to address the inadequacies of Canada’s government care. Canadians pay him to set up surgical procedures, diagnostic tests, and specialist consultations, privately and quickly. “I don’t have a medical background. I just have some common sense,” he explains. “I don’t need to be a doctor for what I do. I’m just expediting care.”

He tells me stories of other people whom his British Columbia–based company, Timely Medical Alternatives, has helped—people like the elderly woman who needed vascular surgery for a major artery in her abdomen and was promised prompt care by one of the most senior bureaucrats in the government, who never called back. “Her doctor told her she’s going to die,” Baker remembers. So Timely got her surgery in a couple of days, in Washington State. Then there was the eight-year-old badly in need of a procedure to help correct her deafness. After watching her surgery get bumped three times, her parents called Timely. She’s now back at school, her hearing partly restored. “The father said, ‘Mr. Baker, my wife and I are in agreement that your star shines the brightest in our heaven,’ ” Baker recalls. “I told that story to a government official. He shrugged. He couldn’t fucking care less.”

Not everyone has kind words for Baker. A woman from a union-sponsored health coalition, writing in a local paper, denounced him for “profiting from people’s misery.” When I bring up the comment, he snaps: “I’m profiting from relieving misery.” Some of the services that Baker brokers almost certainly contravene Canadian law, but governments are loath to stop him. “What I am doing could be construed as civil disobedience,” he says. “There comes a time when people need to lead the government.”

Baker isn’t alone: other private-sector health options are blossoming across Canada, and the government is increasingly turning a blind eye to them, too, despite their often uncertain legal status. Private clinics are opening at a rate of about one a week. Companies like MedCan now offer “corporate medicals” that include an array of diagnostic tests and a referral to Johns Hopkins, if necessary. Insurance firms sell critical-illness insurance, giving policyholders a lump-sum payment in the event of a major diagnosis; since such policyholders could, in theory, spend the money on anything they wanted, medical or not, the system doesn’t count as health insurance and is therefore legal. Testifying to the changing nature of Canadian health care, Baker observes that securing prompt care used to mean a trip south. These days, he says, he’s able to get 80 percent of his clients care in Canada, via the private sector.

Another sign of transformation: Canadian doctors, long silent on the health-care system’s problems, are starting to speak up. Last August, they voted Brian Day president of their national association. A former socialist who counts Fidel Castro as a personal acquaintance, Day has nevertheless become perhaps the most vocal critic of Canadian public health care, having opened his own private surgery center as a remedy for long waiting lists and then challenged the government to shut him down. “This is a country in which dogs can get a hip replacement in under a week,” he fumed to the New York Times, “and in which humans can wait two to three years.”

And now even Canadian governments are looking to the private sector to shrink the waiting lists. Day’s clinic, for instance, handles workers’-compensation cases for employees of both public and private corporations. In British Columbia, private clinics perform roughly 80 percent of government-funded diagnostic testing. In Ontario, where fealty to socialized medicine has always been strong, the government recently hired a private firm to staff a rural hospital’s emergency room.

This privatizing trend is reaching Europe, too. Britain’s government-run health care dates back to the 1940s. Yet the Labour Party—which originally created the National Health Service and used to bristle at the suggestion of private medicine, dismissing it as “Americanization”—now openly favors privatization. Sir William Wells, a senior British health official, recently said: “The big trouble with a state monopoly is that it builds in massive inefficiencies and inward-looking culture.” Last year, the private sector provided about 5 percent of Britain’s nonemergency procedures; Labour aims to triple that percentage by 2008. The Labour government also works to voucherize certain surgeries, offering patients a choice of four providers, at least one private. And in a recent move, the government will contract out some primary care services, perhaps to American firms such as UnitedHealth Group and Kaiser Permanente.

Sweden’s government, after the completion of the latest round of privatizations, will be contracting out some 80 percent of Stockholm’s primary care and 40 percent of its total health services, including one of the city’s largest hospitals. Since the fall of Communism, Slovakia has looked to liberalize its state-run system, introducing co-payments and privatizations. And modest market reforms have begun in Germany: increasing co-pays, enhancing insurance competition, and turning state enterprises over to the private sector (within a decade, only a minority of German hospitals will remain under state control). It’s important to note that change in these countries is slow and gradual—market reforms remain controversial. But if the United States was once the exception for viewing a vibrant private sector in health care as essential, it is so no longer.

Yet even as Stockholm and Saskatoon are percolating with the ideas of Adam Smith, a growing number of prominent Americans are arguing that socialized health care still provides better results for less money. “Americans tend to believe that we have the best health care system in the world,” writes Krugman in the New York Times. “But it isn’t true. We spend far more per person on health care . . . yet rank near the bottom among industrial countries in indicators from life expectancy to infant mortality.”

One often hears variations on Krugman’s argument—that America lags behind other countries in crude health outcomes. But such outcomes reflect a mosaic of factors, such as diet, lifestyle, drug use, and cultural values. It pains me as a doctor to say this, but health care is just one factor in health. Americans live 75.3 years on average, fewer than Canadians (77.3) or the French (76.6) or the citizens of any Western European nation save Portugal. Health care influences life expectancy, of course. But a life can end because of a murder, a fall, or a car accident. Such factors aren’t academic—homicide rates in the United States are much higher than in other countries (eight times higher than in France, for instance). In The Business of Health, Robert Ohsfeldt and John Schneider factor out intentional and unintentional injuries from life-expectancy statistics and find that Americans who don’t die in car crashes or homicides outlive people in any other Western country.

And if we measure a health-care system by how well it serves its sick citizens, American medicine excels. Five-year cancer survival rates bear this out. For leukemia, the American survival rate is almost 50 percent; the European rate is just 35 percent. Esophageal carcinoma: 12 percent in the United States, 6 percent in Europe. The survival rate for prostate cancer is 81.2 percent here, yet 61.7 percent in France and down to 44.3 percent in England—a striking variation.

Like many critics of American health care, though, Krugman argues that the costs are just too high: “In 2002 . . . the United States spent $5,267 on health care for each man, woman, and child.” Health-care spending in Canada and Britain, he notes, is a small fraction of that. Again, the picture isn’t quite as clear as he suggests; because the U.S. is so much wealthier than other countries, it isn’t unreasonable for it to spend more on health care. Take America’s high spending on research and development. M. D. Anderson in Texas, a prominent cancer center, spends more on research than Canada does.

That said, American health care is expensive. And Americans aren’t always getting a good deal. In the coming years, with health expenses spiraling up, it will be easy for some—like the zealous legislators in California—to give in to the temptation of socialized medicine. In Washington, there are plenty of old pieces of legislation that like-minded politicians could take off the shelf, dust off, and promote: expanding Medicare to Americans 55 and older, say, or covering all children in Medicaid.

But such initiatives would push the United States further down the path to a government-run system and make things much, much worse. True, government bureaucrats would be able to cut costs—but only by shrinking access to health care, as in Canada, and engendering a Canadian-style nightmare of overflowing emergency rooms and yearlong waits for treatment. America is right to seek a model for delivering good health care at good prices, but we should be looking not to Canada, but close to home—in the other four-fifths or so of our economy. From telecommunications to retail, deregulation and market competition have driven prices down and quality and productivity up. Health care is long overdue for the same prescription.

Arnold's Health FlopAugust 15, 2007; Page A12After Arnold Schwarzenegger unveiled his universal health-care plan for California in January, almost everyone was laying down palms in Sacramento. Here was a Republican Governor putting aside political squabbling and "doing big things that Washington has failed to do," as Time magazine put it. What a change seven months later, with the plan on the cusp of collapse. There's a lesson here about health-care "bipartisanship" when it's merely a cover for bad policy.

The California legislature is now in the second month of the fiscal year without a budget. Deadlocks are routine because the state requires a two-thirds majority of each house to pass spending bills, though they rarely drag on this long or bitterly. Republicans are taking a hard line on spending and a $1.4 billion operating deficit; and even though the budget is just one Senate Republican vote shy of passage, a deal is unlikely before a recess ends on August 20.

Since the legislative session ends in September, that would mean it's curtains for Governor Schwarzenegger's health-care reform. The estimated $12 billion in new taxes that the plan requires also need a two-thirds majority of both houses. Which is unlikely when the legislature can't even agree on a budget without them. To get around that, the Governor calls them "levies," not taxes. Nice try.

The health-care plan is one reason for the gridlock, which speaks to a political as well as policy failure. In trying to round up Democrats, the Governor ended up alienating Republicans. No wonder: His plan was never that conservative or market-based. Like former Governor Mitt Romney's plan in Massachusetts, it turns on an individual mandate. That is, it requires all residents to buy insurance or get it from the state or their employers -- or otherwise face penalties such as garnished wages.

Once again, a state's universal health-care dreams have run up against fiscal realities. Besides the budget fight, the plan's viability was contingent on $3.7 billion in annual subsidies the Governor has been requesting to expand MediCal (Medicare) and "Healthy Families," part of the State Children's Health Insurance Program. This money is unlikely to materialize, given that the 2006 federal budget called for $4.6 billion in health-care cuts to California over the next decade.

The plan also ran into a buzzsaw because of the damage it would do to California's employment and insurance markets. In what's called "play or pay," businesses would have to cover their employees or pay a 3.5% payroll tax to fund a new state-run insurance program for low-income workers. Doctors would be required to pay 2% and hospitals 4% of gross revenues to fund the same -- assuming they could stay in practice at all.

Governor Schwarz-enegger's "bipartisanship" also provided an opening for state Democrats, who have long desired, but have usually been frustrated in passing, a liberal overhaul of the health-care system. They saw his plan and raised, proposing a 7.5% payroll tax -- another example of "play or pay" becoming "pay or pay." It would also compel onerous insurance regulations like mandated coverage levels and premium ceilings.

The Governor has tried to make the Democratic plan a selling point for his "less burdensome" alternative. But he would merely over-regulate insurance in other ways. He wants "guaranteed issue," which means insurers must accept all comers, allowing people to wait until they're sick to buy insurance. He also wants "community rating," which means that insurance premiums cannot vary based on age or health status. Cost-drivers like these are already a main reason between four million and 6.5 million Californians are uninsured now.

In beating the drum for his plan, Mr. Schwarzenegger has often deplored what he calls the "hidden tax" of the current health-care system. Supposedly that describes the extent to which the costs of treating the uninsured shift to those who have insurance, thus making an argument for universal care.

Yet researchers at Stanford led by Dan Kessler ran the figures and demolished this claim. The total burden of this "cost shifting" in California amounted to only 2.8% of premiums in the 2000s. That's not nothing, but in the Governor's hands this modest hidden tax is an excuse for larger unhidden taxes. Perhaps the puncturing of this argument will prevent it from being deployed in the 2008 health-care debate, though don't count on it.

If Arnold's plan does fail, it will join "universal" health-care dreams in Illinois, Wisconsin, Pennsylvania and other states that were also unveiled to hosannas but flopped once the fine print and costs were exposed. Alas, the failure of these state reforms probably won't diminish political agitation for similar attempts that Democrats or Mr. Romney might propose in Washington. But it should.

Reducing health-care spending isn't hard: Just give the government control over the national health-care budget and you'll see spending decline. Access to physicians and hospitals, the newest technology, important therapies and the best medications will also decline over time. But that's the trade-off society makes when the government controls health-care spending.

It's remarkable how gullible people are who claim, "Canada (or England, or France, etc.) manages to provide universal coverage for much less than the U.S. spends on health care." They seem to think these other countries have reached some sort of economic nirvana. These countries spend less -- usually between 8% to 10% of GDP versus nearly 16% in the U.S. -- simply because health-care spending isn't a function of consumer demand; it's a function of political demand.

Politicians in single-payer countries -- where the public pays higher taxes and the government pays most bills -- decide how much the country will spend on health care, and the prices that will be paid. Since they have to consider education, welfare, defense, etc., as well as the need to keep taxes low enough to encourage economic growth, there is never enough money to go around. There is not one government-run health-care system that is considered adequately funded by those who have to deal with it. In some countries, the rationing, lack of access and waiting lines are worse than others. But they all face these problems.

And virtually any U.S. reform proposal promising "universal coverage" will do the same thing. Why? Because Congress has a long and sordid history of support for health-care price controls.

Medicare reimbursements to hospitals have been price-controlled since 1983, and to physicians since 1992. If Medicare represented 1% or 2% of the health care market -- as the VA does with respect to prescription drugs -- price controls would create distortions, but they would likely be manageable. However, Medicare is the dominant insurer in the country. Its price controls become the benchmark.

Whenever the government controls prices, it arbitrarily determines who it will pay, how much, and for what. Vendors -- that is, providers of goods and services -- generally begin to work the system in order to maximize their gain -- or, more accurately when referring to doctors in Medicare, minimize their losses. When Medicare distorts a price -- and virtually all government-set prices are distorted -- the reverberations are felt throughout the health-care system.

Consider physician reimbursements. Every year, doctors face a cut in Medicare reimbursements, even though their costs for providing care continue to rise. The American Medical Association's lobbying effort has managed to keep current reimbursements about the same as they were in 2001, in part by backing the Medicare Modernization Act in 2003. That's six years without an increase. And unless Congress acts, doctors face a 10% cut in reimbursements in 2008, and a 40% cut by 2016.

At this point, we don't know where doctors' Medicare reimbursements will land; that issue has become a political football in the battle over reauthorization of the State Children's Health Insurance Program (Schip). Democrats are dangling a slight increase in reimbursements, instead of that 10% cut, in exchange for the AMA's support for their massive expansion of Schip.

However, Democrats also want to cut reimbursements to health plans operating in the quickly growing Medicare Advantage program. And they are trying once again to give the federal government the ability to dictate prices -- which they inaccurately describe as a "negotiation" -- for prescription drugs.

All of this is being done in the name of "controlling costs." But does anyone really believe those price controls won't hurt access to quality care?

Increasingly, doctors are refusing to see new Medicare patients. A recent AMA survey found that 60% of responding doctors said they would stop accepting new Medicare patients if the 10% cut is imposed. Even if that figure is inflated by currently angry doctors, it could represent a significant decrease in seniors' access to care.

The situation is worse under Medicaid. It reimburses even less than Medicare, which will lead to more and more access problems for the elderly and the poor. It can also lead to doctors trying to see ever more patients in a given time period in order to keep the income from falling. Less time for each patient reduces the quality of care.

Because politicians want to keep health-care spending as low as possible, they have very little incentive to raise those reimbursement rates. Much easier to rail against "greedy physicians" or use them as pawns when they want to pass other pieces of legislation. You can expect even more political maneuvering if health-care "reform" gives the government increased control over prices and spending.

Either the market will set prices based on supply and demand, or the government will set prices based on budget priorities and bureaucrats' best guess at what specific goods and services should cost. That process may undermine the access to and quality of care, but at least government-run health care advocates can claim it keeps costs down.

Mr. Matthews is director of the Council for Affordable Health Insurance and a resident scholar with the Institute for Policy Innovation.

Hillary Clinton may think bigger government is needed to decide how much Americans should spend on health care and on whom they should spend it. Don't tell that to patients or employers, who've already had enough of third-party diktats thanks to the current system's overreliance on insurance bureaucracies.

For years, visionaries pushed the idea of restoring an active consumer to the equation through the creation of health savings accounts. Guess what? Since HSAs were finally put on an equal tax basis with employer-provided insurance three years ago, no innovation in the history of health insurance has grown as fast. By the end of this year, some eight million Americans will be buying a portion of their medical care with HSA savings, up from 4.5 million in 2006. Savers will have parked about $13.6 billion in the accounts, up from $5.1 billion in 2006.

Liberals complain that HSAs are a "tax break" for wealthy and healthy Americans. In reality, Ms. Clinton and her allies oppose HSAs because they are a cure for the overspending, cost-shifting and inefficiency that otherwise are driving the system towards a government takeover. HSAs work because they restore a consumer's incentive to shop around for cost-effective health care.

Perhaps the best news is that 40% of employers will offer HSAs by year's end, according to Americans for Tax Reform. John Goodman of the National Center for Policy Analysis foresees a critical threshold coming when enough Americans will have these plans that hospitals and doctors will be forced to publish price lists and reduce their costs and improve services to gain customers. That's the way the free-enterprise system works in just about every other industry.

In Michael Moore's movie "Sicko," a widow named Julie Pierce tells a tearful story: Her husband died of kidney cancer after their health-insurance company denied payment for a bone-marrow transplant that might have saved his life. Ms. Pierce's rage is palpable as she repeats the word her insurers used in response to her husband's request. "They denied it," she sneers. "Said it was 'experimental.'"

Viewers of the documentary are meant to understand that "experimental" is health-insurance code for "expensive," and that Ms. Pierce's husband was left to die for the sake of profit. According to Mr. Moore's movie, "Any payment for a claim is referred to as a medical loss," and when a claim is denied, "it's a savings to the company."

But Mr. Moore is so busy following the money that he doesn't take the time to follow the science. Treating cancer patients with bone-marrow transplants has a dubious history.

Twenty years ago, many oncologists believed that bone-marrow transplants, along with high doses of chemotherapy, might offer a cure for breast cancer. Insurance companies refused to pay, calling the treatment experimental and unproven. Breast-cancer sufferers went to court: In one case, a jury awarded $77 million to the family of a woman who was denied payment for the treatment. Wives and mothers told heart-rending stories in newspapers and on TV. Politicians quickly moved to guarantee the treatment to all breast-cancer patients. Ten state legislatures mandated that every insurance policy cover bone-marrow transplantation for breast-cancer patients. Amid the media circus and political self-congratulation, the question of whether bone-marrow transplants are medically effective faded into the background.

The sad truth is that the treatment isn't effective. When researchers released the results of their clinical trials to the American Society of Clinical Oncology in 1999, they showed that the treatment offered no benefit. Worse, it often killed women faster than their cancer, and caused them unnecessary pain. At a time when their health was at its greatest risk, more than 30,000 women were exposed to an invasive, harmful and ultimately useless treatment that the National Institutes of Health no longer recommends. But only one state legislature has repealed its law requiring insurance companies to pay for the treatment. Some doctors believe bone-marrow transplants might help kidney cancer patients, and the NIH is conducting clinical trials to find out. Until the treatment has been shown to do more good than harm, insurers are reluctant to pay for it.

Mr. Moore claims that because private insurance companies are driven by profit, they will always deny care to deserving patients. For this reason, he argues, profit-making health-insurance companies should be abolished, our health- care dollars turned over to the government, and the U.S. should institute a health-care system like the ones in Canada, Britain or France. But does Mr. Moore think, even for a second, that any of the government systems he touts in his movie would have provided a bone-marrow transplant to Ms. Pierce's husband? Fat chance.

When government is in charge of health care, the result is not that everyone gets access to experimental treatments, but that people get less of the care that is absolutely necessary. At any given time, just under a million Canadians are on waiting lists to receive care, and one in eight British patients must wait more than a year for hospital treatment. Canadian Karen Jepp, who gave birth to quadruplets last month, had to fly to Montana for the delivery: neonatal units in her own country had no room.

Rationing in Britain is so severe that one hospital recently tried saving money by not changing bed-sheets between patients. Instead of washing sheets, the staff was encouraged to just turn them over, British papers report. The wait for an appointment with a dentist is so long that people are using pliers to pull out their own rotting teeth.

Patients in countries with government-run health care can't get timely access to many basic medical treatments, never mind experimental treatments. That's why, if you suffer from cancer, you're better off in the U.S., which is home to the newest treatments and where patients have access to the best diagnostic equipment. People diagnosed with cancer in America have a better chance of living a full life than people in countries with socialized systems. Among women diagnosed with breast cancer, only one-quarter die in the U.S., compared to one-third in France and nearly half in the United Kingdom.

Mr. Moore thinks that profit is the enemy and government is the answer. The opposite is true. Profit is what has created the amazing scientific innovations that the U.S. offers to the world. If government takes over, innovation slows, health care is rationed, and spending is controlled by politicians more influenced by the sob story of the moment than by medical science.

Mr. Stossel is co-anchor of "20/20." ABC News will air his TV special on health care at 10 p.m. EST Friday.

I don't agree with all. I don't know what all the fuss is about Moore's movie. It really adds nothing to the debate except for as Mr. Stossel puts it more, "sob stories". I agree whole heartedly that the insurance company has a reasonable right to refuse treatments that are only a theory and not proven to help as in the sob story about the woman with kidney cancer. I wonder if it was pointed out that many kidney cancers are due to cigarettes. I bet not. A friend of mine did bone marrow transplants for women with breast cancer. He later admitted they didn't work - possibly around 1999 as Stossel's story pointed out - I don't recall exactly.

***But Mr. Moore is so busy following the money that he doesn't take the time to follow the science. Treating cancer patients with bone-marrow transplants has a dubious history.***

This statement is so true. Did Moore point out the John Edwards made a fortune on science that turned out to be untrue? If Edwards was a Republican he might have.

***But does Mr. Moore think, even for a second, that any of the government systems he touts in his movie would have provided a bone-marrow transplant to Ms. Pierce's husband? Fat chance.***

I don't know if the government would or not. I thought the NIH and other sponsers of experimental treatments are for this.

***Mr. Moore thinks that profit is the enemy and government is the answer. The opposite is true. Profit is what has created the amazing scientific innovations that the U.S. offers to the world. If government takes over, innovation slows, health care is rationed, and spending is controlled by politicians more influenced by the sob story of the moment than by medical science.***

I agree profit is not the enemy and the proof of that is the US leads in health care innovation. I agree with the other statements but Stossel fails to point out that health care under private insurance is also rationed and inadequate. Look at simply the large number of people who can't afford their own health insurance, or those with "pre-existing" conditions who cannot, for any price, get health coverage. And these are the people that need it most! Many fall throught the cracks. They are not disabled so they don't qualify for disability Medicare. Yet they do not qualify for Medicaid either.

I posted this as a copied page vs a direct link because the direct link brings no subscribers into the subscriber area. Unfortunately, this method loses the slides but the main verbiage of the article is complete.

In any case here is one lecturer's opinion. I do not offer it as the gospel, or necessarily my view, but just as one distinguished doctor's opinion. Thoughts are most welcome:

The New England Journal of Medicine

Shattuck Lecture Volume 357:1221-1228 September 20, 2007 Number 12

We Can Do Better — Improving the Health of the American PeopleSteven A. Schroeder, M.D.

***The United States spends more on health care than any other nation in the world, yet it ranks poorly on nearly every measure of health status. How can this be? What explains this apparent paradox?

The two-part answer is deceptively simple — first, the pathways to better health do not generally depend on better health care, and second, even in those instances in which health care is important, too many Americans do not receive it, receive it too late, or receive poor-quality care. In this lecture, I first summarize where the United States stands in international rankings of health status. Next, using the concept of determinants of premature death as a key measure of health status, I discuss pathways to improvement, emphasizing lessons learned from tobacco control and acknowledging the reality that better health (lower mortality and a higher level of functioning) cannot be achieved without paying greater attention to poor Americans. I conclude with speculations on why we have not focused on improving health in the United States and what it would take to make that happen.

Health Status of the American Public

Among the 30 developed nations that make up the Organization for Economic Cooperation and Development (OECD), the United States ranks near the bottom on most standard measures of health status (Table 1).1,2,3,4 (One measure on which the United States does better is life expectancy from the age of 65 years, possibly reflecting the comprehensive health insurance provided for this segment of the population.) Among the 192 nations for which 2004 data are available, the United States ranks 46th in average life expectancy from birth and 42nd in infant mortality.5,6 It is remarkable how complacent the public and the medical profession are in their acceptance of these unfavorable comparisons, especially in light of how carefully we track health-systems measures, such as the size of the budget for the National Institutes of Health, trends in national spending on health, and the number of Americans who lack health insurance. One reason for the complacency may be the rationalization that the United States is more ethnically heterogeneous than the nations at the top of the rankings, such as Japan, Switzerland, and Iceland. It is true that within the United States there are large disparities in health status — by geographic area, race and ethnic group, and class.7,8,9 But even when comparisons are limited to white Americans, our performance is dismal (Table 1). And even if the health status of white Americans matched that in the leading nations, it would still be incumbent on us to improve the health of the entire nation.

Pathways to Improving Population Health

Health is influenced by factors in five domains — genetics, social circumstances, environmental exposures, behavioral patterns, and health care (Figure 1).10,11 When it comes to reducing early deaths, medical care has a relatively minor role. Even if the entire U.S. population had access to excellent medical care — which it does not — only a small fraction of these deaths could be prevented. The single greatest opportunity to improve health and reduce premature deaths lies in personal behavior. In fact, behavioral causes account for nearly 40% of all deaths in the United States.12 Although there has been disagreement over the actual number of deaths that can be attributed to obesity and physical inactivity combined, it is clear that this pair of factors and smoking are the top two behavioral causes of premature death (Figure 2).12

Addressing Unhealthy Behaviol

Clinicians and policymakers may question whether behavior is susceptible to change or whether attempts to change behavior lie outside the province of traditional medical care.13 They may expect future successes to follow the pattern whereby immunization and antibiotics improved health in the 20th century. If the public's health is to improve, however, that improvement is more likely to come from behavioral change than from technological innovation. Experience demonstrates that it is in fact possible to change behavior, as illustrated by increased seat-belt use and decreased consumption of products high in saturated fat. The case of tobacco best demonstrates how rapidly positive behavioral change can occur.

The Case of Tobacco

The prevalence of smoking in the United States declined among men from 57% in 1955 to 23% in 2005 and among women from 34% in 1965 to 18% in 2005.14,15 Why did tobacco use fall so rapidly? The 1964 report of the surgeon general, which linked smoking and lung cancer, was followed by multiple reports connecting active and passive smoking to myriad other diseases. Early antismoking advocates, initially isolated, became emboldened by the cascade of scientific evidence, especially with respect to the risk of exposure to secondhand smoke. Counter-marketing — first in the 1960s and more recently by several states and the American Legacy Foundation's "truth®" campaign — linked the creativity of Madison Avenue with messages about the duplicity of the tobacco industry to produce compelling antismoking messages16 (an antismoking advertisement is available with the full text of this article at www.nejm.org). Laws, regulations, and litigation, particularly at the state and community levels, led to smoke-free public places and increases in the tax on cigarettes — two of the strongest evidence-based tobacco-control measures.14,17,18 In this regard, local governments have been far ahead of the federal government, and they have inspired European countries such as Ireland and the United Kingdom to make public places smoke-free.14,19 In addition, new medications have augmented face-to-face and telephone counseling techniques to increase the odds that clinicians can help smokers quit.15,20,21

It is tempting to be lulled by this progress and shift attention to other problems, such as the obesity epidemic. But there are still 44.5 million smokers in the United States, and each year tobacco use kills 435,000 Americans, who die up to 15 years earlier than nonsmokers and who often spend their final years ravaged by dyspnea and pain.14,20 In addition, smoking among pregnant women is a major contributor to premature births and infant mortality.20 Smoking is increasingly concentrated in the lower socioeconomic classes and among those with mental illness or problems with substance abuse.15,22,23 People with chronic mental illness die an average of 25 years earlier than others, and a large percentage of those years are lost because of smoking.24 Estimates from the Smoking Cessation Leadership Center at the University of California at San Francisco, which are based on the high rates and intensity (number of cigarettes per day plus the degree to which each is finished) of tobacco use in these populations, indicate that as many as 200,000 of the 435,000 Americans who die prematurely each year from tobacco-related deaths are people with chronic mental illness, substance-abuse problems, or both.22,25 Understanding why they smoke and how to help them quit should be a key national research priority. Given the effects of smoking on health, the relative inattention to tobacco by those federal and state agencies charged with protecting the public health is baffling and disappointing.

The United States is approaching a "tobacco tipping point" — a state of greatly reduced smoking prevalence. There are already low rates of smoking in some segments of the population, including physicians (about 2%), people with a postgraduate education (8%), and residents of the states of Utah (11%) and California (14%).25 When Kaiser Permanente of northern California implemented a multisystem approach to help smokers quit, the smoking rate dropped from 12.2% to 9.2% in just 3 years.25 Two basic strategies would enable the United States to meet its Healthy People 2010 tobacco-use objective of 12% population prevalence: keep young people from starting to smoke and help smokers quit. Of the two strategies, smoking cessation has by far the larger short-term impact. Of the current 44.5 million smokers, 70% claim they would like to quit.20 Assuming that one half of those 31 million potential nonsmokers will die because of smoking, that translates into 15.5 million potentially preventable premature deaths.20,26 Merely increasing the baseline quit rate from the current 2.5% of smokers to 10% — a rate seen in placebo groups in most published trials of the new cessation drugs — would prevent 1,170,000 premature deaths. No other medical or public health intervention approaches this degree of impact. And we already have the tools to accomplish it.14,27

Is Obesity the Next Tobacco?

Although there is still much to do in tobacco control, it is nevertheless touted as a model for combating obesity, the other major, potentially preventable cause of death and disability in the United States. Smoking and obesity share many characteristics (Table 2). Both are highly prevalent, start in childhood or adolescence, were relatively uncommon until the first (smoking) or second (obesity) half of the 20th century, are major risk factors for chronic disease, involve intensively marketed products, are more common in low socioeconomic classes, exhibit major regional variations (with higher rates in southern and poorer states), carry a stigma, are difficult to treat, and are less enthusiastically embraced by clinicians than other risk factors for medical conditions.

Nonetheless, obesity differs from smoking in many ways (Table 2). The binary definition of smoking status (smoker or nonsmoker) does not apply to obesity. Body-mass index, the most widely used measure of obesity, misclassifies as overweight people who have large muscle mass, such as California governor Arnold Schwarzenegger. It is not biologically possible to stop eating, and unlike moderate smoking, eating a moderate amount of food is not hazardous. There is no addictive analogue to nicotine in food. Nonsmokers mobilize against tobacco because they fear injury from secondhand exposure, which is not a peril that attends obesity. The food industry is less concentrated than the tobacco industry, and although its advertising for children has been criticized as predatory and its ingredient-labeling practices as deceptive, it has yet to fall into the ill repute of the tobacco industry. For these reasons, litigation is a more problematic strategy, and industry payouts — such as the Master Settlement Agreement between the tobacco industry and 46 state attorneys general to recapture the Medicaid costs of treating tobacco-related diseases — are less likely.14 Finally, except for the invasive option of bariatric surgery, there are even fewer clinical tools available for treating obesity than there are for treating addiction to smoking.

Several changes in policy have been proposed to help combat obesity.28,29,30 Selective taxes and subsidies could be used as incentives to change the foods that are grown, brought to market, and consumed, though the politics involved in designating favored and penalized foods would be fierce.31 Restrictions could also apply to the use of food stamps. Given recent data indicating that children see from 27 to 48 food advertisements for each 1 promoting fitness or nutrition, regulations could be put in place to shift that balance or to mandate support for sustained social-marketing efforts such as the "truth®" campaign against smoking.16,32 Requiring more accurate labeling of caloric content and ingredients, especially in fast-food outlets, could make customers more aware of what they are eating and induce manufacturers to alter food composition. Better pharmaceutical products and counseling programs could motivate clinicians to view obesity treatment more enthusiastically. In contrast to these changes in policy, which will require national legislation, regulation, or research investment, change is already under way at the local level. Some schools have banned the sale of soft drinks and now offer more nutritionally balanced lunches. Opportunities for physical activity at work, in school, and in the community have been expanded in a small but growing number of locations.

Nonbehavioral Causes of Premature Death

Improving population health will also require addressing the nonbehavioral determinants of health that we can influence: social, health care, and environmental factors. (To date, we lack tools to change our genes, although behavioral and environmental factors can modify the expression of genetic risks such as obesity.) With respect to social factors, people with lower socioeconomic status die earlier and have more disability than those with higher socioeconomic status, and this pattern holds true in a stepwise fashion from the lowest to the highest classes.33,34,35,36,37,38 In this context, class is a composite construct of income, total wealth, education, employment, and residential neighborhood. One reason for the class gradient in health is that people in lower classes are more likely to have unhealthy behaviors, in part because of inadequate local food choices and recreational opportunities. Yet even when behavior is held constant, people in lower classes are less healthy and die earlier than others.33,34,35,36,37,38 It is likely that the deleterious influence of class on health reflects both absolute and relative material deprivation at the lower end of the spectrum and psychosocial stress along the entire continuum. Unlike the factors of health care and behavior, class has been an "ignored determinant of the nation's health."33 Disparities in health care are of concern to some policymakers and researchers, but because the United States uses race and ethnic group rather than class as the filter through which social differences are analyzed, studies often highlight disparities in the receipt of health care that are based on race and ethnic group rather than on class.

But aren't class gradients a fixture of all societies? And if so, can they ever be diminished? The fact is that nations differ greatly in their degree of social inequality and that — even in the United States — earning potential and tax policies have fluctuated over time, resulting in a narrowing or widening of class differences. There are ways to address the effects of class on health.33 More investment could be made in research efforts designed to improve our understanding of the connection between class and health. More fundamental, however, is the recognition that social policies involving basic aspects of life and well-being (e.g., education, taxation, transportation, and housing) have important health consequences. Just as the construction of new buildings now requires environmental-impact analyses, taxation policies could be subjected to health-impact analyses. When public policies widen the gap between rich and poor, they may also have a negative effect on population health. One reason the United States does poorly in international health comparisons may be that we value entrepreneurialism over egalitarianism. Our willingness to tolerate large gaps in income, total wealth, educational quality, and housing has unintended health consequences. Until we are willing to confront this reality, our performance on measures of health will suffer.

One nation attempting to address the effects of class on health is the United Kingdom. Its 1998 Acheson Commission, which was charged with reducing health disparities, produced 39 policy recommendations spanning areas such as poverty, income, taxes and benefits, education, employment, housing, environment, transportation, and nutrition. Only 3 of these 39 recommendations pertained directly to health care: all policies that influence health should be evaluated for their effect on the disparities in health resulting from differences in socioeconomic status; a high priority should be given to the health of families with children; and income inequalities should be reduced and living standards among the poor improved.39 Although implementation of these recommendations has been incomplete, the mere fact of their existence means more attention is paid to the effects of social policies on health. This element is missing in U.S. policy discussions — as is evident from recent deliberations on income-tax policy.

Although inadequate health care accounts for only 10% of premature deaths, among the five determinants of health (Figure 1), health care receives by far the greatest share of resources and attention. In the case of heart disease, it is estimated that health care has accounted for half of the 40% decline in mortality over the past two decades.40 (It may be that exclusive reliance on international mortality comparisons shortchanges the results of America's health care system. Perhaps the high U.S. rates of medical-technology use translate into comparatively better function. To date, there are no good international comparisons of functional status to test that theory, but if it could be substantiated, there would be an even more compelling claim for expanded health insurance coverage.) U.S. expenditures on health care in 2006 were an estimated $2.1 trillion, accounting for 16% of our gross domestic product.41 Few other countries even reach double digits in health care spending.

There are two basic ways in which health care can affect health status: quality and access. Although qualitative deficiencies in U.S. health care have been widely documented,42 there is no evidence that its performance in this dimension is worse than that of other OECD nations. In the area of access, however, we trail nearly all the countries: 45 million U.S. citizens (plus millions of immigrants) lack health insurance, and millions more are seriously underinsured. Lack of health insurance leads to poor health.43 Not surprisingly, the uninsured are disproportionately represented among the lower socioeconomic classes.

Environmental factors, such as lead paint, polluted air and water, dangerous neighborhoods, and the lack of outlets for physical activity, also contribute to premature death. People with lower socioeconomic status have greater exposure to these health-compromising conditions. As with social determinants of health and health insurance coverage, remedies for environmental risk factors lie predominantly in the political arena.44

The Case for Concentrating on the Less Fortunate

Since all the actionable determinants of health — personal behavior, social factors, health care, and the environment — disproportionately affect the poor, strategies to improve national health rankings must focus on this population. To the extent that the United States has a health strategy, its focus is on the development of new medical technologies and support for basic biomedical research. We already lead the world in the per capita use of most diagnostic and therapeutic medical technologies, and we have recently doubled the budget for the National Institutes of Health. But these popular achievements are unlikely to improve our relative performance on health. It is arguable that the status quo is an accurate expression of the national political will — a relentless search for better health among the middle and upper classes. This pursuit is also evident in how we consistently outspend all other countries in the use of alternative medicines and cosmetic surgeries and in how frequently health "cures" and "scares" are featured in the popular media.45 The result is that only when the middle class feels threatened by external menaces (e.g., secondhand tobacco smoke, bioterrorism, and airplane exposure to multidrug-resistant tuberculosis) will it embrace public health measures. In contrast, our investment in improving population health — whether judged on the basis of support for research, insurance coverage, or government-sponsored public health activities — is anemic.46,47,48 Although the Department of Health and Human Services periodically produces admirable population health goals — most recently, the Healthy People 2010 objectives49 — no government department or agency has the responsibility and authority to meet these goals, and the importance of achieving them has yet to penetrate the political process.

Why Don't Americans Focus on Factors That Can Improve Health?

The comparatively weak health status of the United States stems from two fundamental aspects of its political economy. The first is that the disadvantaged are less well represented in the political sphere here than in most other developed countries, which often have an active labor movement and robust labor parties. Without a strong voice from Americans of low socioeconomic status, citizen health advocacy in the United States coalesces around particular illnesses, such as breast cancer, human immunodeficiency virus infection and the acquired immunodeficiency syndrome (HIV–AIDS), and autism. These efforts are led by middle-class advocates whose lives have been touched by the disease. There have been a few successful public advocacy campaigns on issues of population health — efforts to ban exposure to secondhand smoke or to curtail drunk driving — but such efforts are relatively uncommon.44 Because the biggest gains in population health will come from attention to the less well off, little is likely to change unless they have a political voice and use it to argue for more resources to improve health-related behaviors, reduce social disparities, increase access to health care, and reduce environmental threats. Social advocacy in the United States is also fragmented by our notions of race and class.33 To the extent that poverty is viewed as an issue of racial injustice, it ignores the many whites who are poor, thereby reducing the ranks of potential advocates.

The relatively limited role of government in the U.S. health care system is the second explanation. Many are familiar with our outlier status as the only developed nation without universal health care coverage.50 Less obvious is the dispersed and relatively weak status of the various agencies responsible for population health and the fact that they are so disconnected from the delivery of health services. In addition, the American emphasis on the value of individual responsibility creates a reluctance to intervene in what are seen as personal behavioral choices.

How Can the Nation's Health Improve?

Given that the political dynamics of the United States are unlikely to change soon and that the less fortunate will continue to have weak representation, are we consigned to a low-tier status when it comes to population health? In my view, there is room for cautious optimism. One reason is that despite the epidemics of HIV–AIDS and obesity, our population has never been healthier, even though it lags behind so many other countries. The gain has come from improvements in personal behavior (e.g., tobacco control), social and environmental factors (e.g., reduced rates of homicide and motor-vehicle accidents and the introduction of fluoridated water), and medical care (e.g., vaccines and cardiovascular drugs). The largest potential for further improvement in population health lies in behavioral risk factors, especially smoking and obesity. We already have tools at hand to make progress in tobacco control, and some of these tools are applicable to obesity. Improvement in most of the other factors requires political action, starting with relentless measurement of and focus on actual health status and the actions that could improve it. Inaction means acceptance of America's poor health status.

Improving population health would be more than a statistical accomplishment. It could enhance the productivity of the workforce and boost the national economy, reduce health care expenditures, and most important, improve people's lives. But in the absence of a strong political voice from the less fortunate themselves, it is incumbent on health care professionals, especially physicians, to become champions for population health. This sense of purpose resonates with our deepest professional values and is the reason why many chose medicine as a profession. It is also one of the most productive expressions of patriotism. Americans take great pride in asserting that we are number one in terms of wealth, number of Nobel Prizes, and military strength. Why don't we try to become number one in health?***

October 11, 2007The madness of feeding this ravenous NHSCamilla CavendishWhatever you made of the Chancellor’s various sleights of hand on Tuesday, lurking beneath his Budget plans was one inescapable fact. The hungry maw of the NHS is swallowing more and more resources, at the expense of virtually everything else. The defence budget is at its lowest since 1930, despite our dwindling troops being dotted across three continents. Prison overcrowding is at such record levels that Jack Straw will have to release even more inmates early in a few weeks’ time. But the health service marches relentlessly on, having hoovered up two thirds of the increase in public spending in the past five years.

Even “enterprise” – once one of Mr Brown’s favourite words – has been tapped. This week’s new taxes on small business seemed unwise, given the fragility of the economy. They were also wholly avoidable, had the NHS been awarded the 3 to 3.5 per cent spending settlement that was expected. But a 4 per cent annual rise for the NHS, raising its budget from £90 billion to almost £110 billion by 2010, seemed to have become a political imperative.

Why? Well, 4 per cent is a nice round number. It is also more than half the 7 per cent annual increases that the service has got used to. But it is also simply very hard to row back once you’ve built an expanded State. This applies to all public services – which is why I wonder whether Messrs Darling and Brown will actually meet their lower spending targets – but it is particularly acute in health.

The NHS is Britain’s last big state monopoly. It is the largest employer in the developed world. Its 1.4 million staff outnumber the private and public healthcare workforce of Germany, a country with 25 per cent more people and better health outcomes. Its powerful unions view any slowdown in spending growth as a “cut”. And cut is a deadly word in political terms. The Government had its chance, when it was flush with cash, to demand reform as a quid pro quo for more money. But it did not go far enough.

Background£1bn extra to go on more GP careLeaner times provide a healthy shock to the systemSticking PlasterNHS may be sick, but this won’t cure itIn the 1990s it was possible to argue that the NHS was starved of cash. But not any more. Britain is now spending at about the European average, but lags behind too many other European countries in terms of results. Far too many cancer patients, babies and stroke victims are still dying needlessly. Far too many patients, particularly the elderly, are treated with a callousness bordering on brutality. Almost everyone I know who has had a baby recently has been told by the nurses to bring their own Jif, and not to set foot in an NHS shower without scrubbing it. World-class that isn’t.

Sir Derek Wanless, Gordon Brown’s former health guru, reported last month that almost half of the extra £45 billion that has been spent in the past five years has gone on pay and price inflation. The NHS generates its own inflation as though it were a country in its own right. But the slowdown in government spending is not, sadly, due to a realisation that there are diminishing returns to spending in a monolithic health service. It is merely the Government running low on cash.

The real issues are repeatedly obscured by homilies about the NHS being the envy of the world. The latest to fall into this trap is Lord Darzi of Denham, the eminent surgeon who is supposed to be reviewing the structure of the NHS. Thank heavens he is still practising on Thursdays and Fridays. For his interim report last week was little more than an advert for the Government’s two populist priorities: extending GP opening hours and tackling MRSA. Until then, the greatest worry about the Darzi review had been that it might delay progress towards much needed reforms. No one had dreamt that he would be coopted into a propaganda exercise. We do not need a top surgeon to tell us to wash our hands. Nor to invent another centralised “Innovation Council” to champion change, a snip at £100 million. The NHS badly needs more innovation. But you cannot impose it. You can only nurture it, by liberating doctors and by introducing competition.

If this simple fact is not obvious to ministers by now, then all is lost. For the limited moves that the last Blair administration made to introduce competition have paid off handsomely. Letting independent providers carry out some procedures has slashed waiting lists for hip replacements, cataracts and heart operations, and has raised the standard for what can be achieved. Payment by results and the NHS tariff have helped to make costs more transparent and to give a wake-up call to poor performers. Giving the best hospitals more freedom as foundation trusts, under a savvy regulator, has injected a new sense of financial rigour.

Yet ministers have always been embarrassed to claim credit for these achievements, which are loathed by the unions. They are in the strange position of presiding over some brave reforms while having to bloviate about minor issues: free health checks (didn’t we used to get those at the doctor?) and expanded GP opening hours (which was the norm, until ministers decided to pay them more to do less).

Ministers are too easily persuaded that the battle is between public and private provision. They are ashamed to endorse the private. But the real battle is between those who want to protect their monopolies – including many private hospitals – and those who want competition. Many NHS insiders who believe most fervently in the service are those who are fighting for competition. But they are still an endangered species. It is of no help to them when ministers send ambivalent signals.

No one is quite sure yet how committed the new Prime Minister is to market-based reforms. The opposition parties will not ask him. Labour’s largesse has boxed them into a corner. Neither Conservatives nor Liberals dare to make the case for proper reform.

That is the real price of having built a bloated State. No one dares speak the truth, because there are so many vested interests to offend. But the writing is on the wall: a tax-funded free healthcare system is looking ever less sustainable. Politicians always fear the “popularity” of our health service. But that popularity will wane if the NHS comes to be seen as the enemy of every other public service.

— Camilla Cavendish will be speaking on child protection at the Battle of Ideas on Saturday, October 27. More details at www.battleofideas.org.uk

October 28, 2007Quack Michael Moore has mad view of the NHSMinette Marrin

The fourth estate has always had a bad name, but it seems to be getting worse. Journalism should be an honest and useful trade, and often still is. But now that journalism has more power than ever before, it seems to have become ever more disreputable. In recent years it has been brought lower and lower by kiss-and-tell betrayals, by “reality” TV, by shockumentaries and by liars, fantasists, hucksters and geeks of every kind, crowing and denouncing and emoting in a hideous new version of Bunyan’s Vanity Fair.

Outstanding among these is Michael Moore, the American documentary maker. He specialises in searing indictments, such as Fahrenheit 9/11 and Bowling for Columbine, and has, without a doubt, a genius for it. Although his films are crude, manipulative and one-sided, he is idolised by millions of Americans and Europeans, widely seen as some sort of redneck Mr Valiant-for-truth.

Nothing could be further from the truth. His latest documentary, Sicko, was released in cinemas last week. Millions of people will see it and all too many of them will be misled.

Sicko, like all Moore’s films, is about an important and emotive subject – healthcare. He contrasts the harsh and exclusive system in the US with the European ideal of universal socialised medicine, equal and free for all, and tries to demonstrate that one is wrong and the other is right. So far, so good; there are cases to be made.

Unfortunately Sicko is a dishonest film. That is not only my opinion. It is the opinion of Professor Lord Robert Winston, the consultant and advocate of the NHS. When asked on BBC Radio 4 whether he recognised the NHS as portrayed in this film, Winston replied: “No, I didn’t. Most of it was filmed at my hospital [the Hammersmith in west London], which is a very good hospital but doesn’t represent what the NHS is like.”

I didn’t recognise it either, from years of visiting NHS hospitals. Moore painted a rose-tinted vision of spotless wards, impeccable treatment, happy patients who laugh away any suggestion of waiting in casualty, and a glamorous young GP who combines his devotion to his patients with a salary of £100,000, a house worth £1m and two cars. All this, and for free.

This, along with an even rosier portrait of the French welfare system, is what Moore says the state can and should provide. You would never guess from Sicko that the NHS is in deep trouble, mired in scandal and incompetence, despite the injection of billions of pounds of taxpayers’ money.

While there are good doctors and nurses and treatments in the NHS, there is so much that is inadequate or bad that it is dishonest to represent it as the envy of the world and a perfect blueprint for national healthcare. It isn’t.

GPs’ salaries – used by Moore as evidence that a state-run system does not necessarily mean low wages – is highly controversial; their huge pay rise has coincided with a loss of home visits, a serious problem in getting GP appointments and continuing very low pay for nurses and cleaners.

At least 20 NHS trusts have even worse problems with the hospital-acquired infection clostridium difficile, not least the trust in Kent where 90 people died of C diff in a scandal reported recently.

Many hospitals are in crisis. Money shortages, bad management, excesses of bureaucrats and deadly Whitehall micromanagement mean they have to skimp on what matters most.

Overfilling the beds is dangerous to patients, in hygiene and in recovery times, but it goes on widely. Millions are wasted on expensive agency nurses because NHS nurses are abandoning the profession in droves. Only days ago, the 2007 nurse of the year publicly resigned in despair at the health service. There is a dangerous shortage of midwives since so many have left, and giving birth on the NHS can be a shocking experience.

Meanwhile thousands of young hospital doctors, under a daft new employment scheme, were sent randomly around the country, pretty much regardless of their qualifications or wishes. As foreign doctors are recruited from Third World countries, hundreds of the best-qualified British doctors have been left unemployed. Several have emigrated.

As for consultants, the men in Whitehall didn’t believe what they said about the hours they worked, beyond their duties, and issued new contracts forcing them to work less. You could hardly make it up.

None of these problems mean we should abandon the idea of a universal shared system of healthcare. It’s clear we would not want the American model, even if it isn’t quite as bad as portrayed by Moore. It’s clear our British private medical insurance provision is a rip-off. I believe we should as a society share burdens of ill health and its treatment. The only question is how best to do that and it seems to me the state-run, micromanaged NHS has failed to answer it.

By ignoring these problems, and similar ones in France’s even more generous and expensive health service, Moore is lying about the answer to that question. I wonder whether the grotesquely fat film-maker is aware of the delicious irony that in our state-run system, the government and the NHS have been having serious public discussion about the necessity of refusing to treat people who are extremely obese.

One can only wonder why Sicko is so dishonestly biased. It must be partly down to Moore’s personal vainglory; he has cast himself as a high priest of righteous indignation, the people’s prophet, and he has an almost religious following. He’s a sort of docu-evangelist, dressed like a parody of the American man of the people, with jutting jaw, infantile questions and aggressively aligned baseball cap.

However, behind the pleasures of righteous indignation for him and his audience, there is something more sinister. There’s money in indignation, big money. It is just one of the many extreme sensations that are lucrative for journalists to whip up, along with prurience, disgust and envy. Michael Moore is not Mr Valiant-for-truth. He is Mr Worldly-wiseman, laughing behind his hand at all the gawping suckers in Vanity Fair. Don’t go to his show.

Looking at Dutch and Swiss Health Systems GARDINER HARRISPublished: October 30, 2007WASHINGTON, Oct. 29 —The Swiss and Dutch health care systems are suddenly all the rage. They have features similar to proposals by at least two presidential hopefuls, and next month the United States’ top health official will visit Switzerland and the Netherlands to kick the tires.

Health and Human Services Secretary Michael O. Leavitt will see health systems in the Netherlands and Switzerland. Health and Human Services Secretary Michael O. Leavitt will visit Switzerland on Nov. 7 and then fly to The Hague for two days. His schedule is filled with meetings with ministers and technocrats, hospital officials and insurance executives and patients and their advocates.

In Switzerland and the Netherlands, all people have to obtain health insurance or pay a penalty. Employers are exempt from the mandates, and private insurers and hospitals provide care.

“We have been hearing a lot of people in the health policy community talk about how those two countries had been doing new things in health access, and the secretary wanted to get a closer look at what they’re doing,” a department official said.

The trip is not a sign, however, that the Bush administration is considering major health initiatives, officials said.

“We don’t have anything cooking that we haven’t announced,” the department official said. “We would not endorse a system like the Netherlands or Switzerland’s. But if there’s something we could learn about their system, we should learn about it.”

Other experts, however, are endorsing the two countries’ health systems.

The proposals of Senator Hillary Rodham Clinton and John Edwards borrow heavily from changes in the two countries. Mitt Romney’s changes when he was governor of Massachusetts were in part modeled on those in Switzerland. Mr. Romney has not endorsed this approach as a candidate seeking the Republican presidential nomination.

The Healthy Americans Act, introduced by Senators Ron Wyden, Democrat of Oregon, and Robert F. Bennett, Republican of Utah, would largely adopt the Dutch reforms.

Mr. Wyden said Mr. Leavitt’s trip was part of growing Republican support for proposals for universal health care through individual mandates and private providers.

A spokeswoman for America’s Health Insurance Plans, Susan Pisano, said she was struck by Mr. Leavitt’s timing. On Wednesday, Ms. Pisano’s trade group will be the host of a luncheon at which Dutch and Swiss insurance executives will discuss the changes in Europe.

The event is meant to dispel the myth that every nation that provides universal health care does so through government-run systems.

“The only models we seem to focus on here are those in Canada and Great Britain, which both have government-run systems,” Ms. Pisano said. “We thought it made sense to look at two countries that have universal coverage but rely on the private sector to get there.”

W. David Helms, president of AcademyHealth, a health policy research organization here, said he met top Dutch health officials for several days this month in the Netherlands.

The Netherlands is a particularly good model for the United States, Mr. Helms said, because it has solved two basic problems: moving from an employer-based system to one in which individuals buy their own insurance and subsidizing care for the poor.

“I think the Netherlands is hot right now because a number of people are realizing that we need to go to an individual-based system instead of an employer-based one,” he said.

Robert Blendon, a professor of health policy and political analysis at the Harvard School of Public Health, said interest in the Swiss and Dutch models had soared among policy experts because of a growing consensus that the United States would never adopt a single-payer system.

Professor Blendon said that the Massachusetts plan and Gov. Arnold Schwarzenegger’s proposal for California demonstrated that such changes were politically feasible, and that the Netherlands and Switzerland showed that they could work.

Wait times for Canadians needing surgery hit an all time high of more than 18 weeks in 2007Release Date: October 15, 2007-CALGARY, AB—A typical Canadian seeking surgical or other therapeutic treatment had to wait 18.3 weeks in 2007, an all-time high, according to new research published today by independent research organization The Fraser Institute.

“Despite government promises and the billions of dollars funneled into the Canadian health care system, the average patient waited more than 18 weeks in 2007 between seeing their family doctor and receiving the surgery or treatment they required,” said Nadeem Esmail, Director of Health System Performance Studies at The Fraser Institute and co-author of the 17th annual edition of Waiting Your Turn: Hospital Waiting Lists in Canada.

The survey measures median waiting times to document the extent to which queues for visits to specialists and for diagnostic and surgical procedures are used to control health care expenditures.

“It’s becoming clearer that Canada’s current health care system can not meet the needs of Canadians in a timely and efficient manner, unless you consider access to a waiting list timely and efficient,” Esmail added.

The 2007 survey found the total median waiting time for patients between referral from a general practitioner and treatment, averaged across all 12 specialties and 10 provinces surveyed, increased to 18.3 weeks from 17.8 weeks observed in 2006. This is primarily due to an increase in the first wait, between seeing the general practitioner and attending a consultation with a specialist.

Total wait times increased in six provinces: Alberta, Manitoba, Ontario, Quebec, Nova Scotia, and Newfoundland. This masked the decreased wait times in British Columbia, Saskatchewan, New Brunswick and Prince Edward Island.

Total Waiting Time

Ontario recorded the shortest waiting time overall (the wait between visiting a general practitioner and receiving treatment), at 15 weeks, followed by British Columbia (19 weeks) and Quebec (19.4 weeks). Saskatchewan (27.2 weeks), New Brunswick (25.2 weeks) and Nova Scotia (24.8 weeks) recorded the longest waits in Canada.

The First Wait: Between General Practitioner and Specialist Consultation

The waiting time between referral by a GP and consultation with a specialist rose to 9.2 weeks from the 8.8 weeks recorded in 2006. The shortest waits for specialist consultations were in Ontario (7.6 weeks), Manitoba (8.2 weeks), and British Columbia (8.8 weeks).

The longest waits for consultation with a specialist were recorded in New Brunswick (14.7 weeks), Newfoundland (13.5 weeks), and Prince Edward Island (12.7 weeks).

The Second Wait: Between Specialist Consultation and Treatment

The waiting time between specialist consultation and treatment—the second stage of waiting—increased to 9.1 weeks from 9 weeks in 2006. The shortest specialist-to-treatment waits were found in Ontario (7.3 weeks), Alberta (8.9 weeks), and Quebec (9.4 weeks), while the longest waits were in Saskatchewan (16.5 weeks), Nova Scotia (13.6 weeks), and Manitoba (12.0 weeks).

As in past years, patients also experienced significant waiting times for various diagnostic technologies across Canada: computed tomography (CT), magnetic resonance imaging (MRI), and ultrasound scans.

The median wait for a CT scan across Canada was 4.8 weeks. British Columbia, Alberta, Ontario, New Brunswick, and Nova Scotia had the shortest wait for CT scans (4 weeks), while the longest wait occurred in Manitoba (8 weeks). The median wait for an MRI across Canada was 10.1 weeks. Patients in Ontario experienced the shortest wait for an MRI (7.8 weeks), while Newfoundland residents waited longest (20 weeks). The median wait for ultrasound was 3.9 weeks across Canada. Alberta and Ontario displayed the shortest wait for ultrasound (2 weeks), while Prince Edward Island and Manitoba exhibited the longest ultrasound waiting time (10 weeks).

Number of Procedures for Which People are Waiting

Throughout Canada, the total number of procedures for which people are waiting in 2007 is 827,429, an increase of 7.4 per cent from the estimated 770,641 procedures in 2006. The number of procedures for which people waited rose in Alberta, Manitoba, Ontario, Quebec, Nova Scotia, and Newfoundland. Assuming that each person was waiting for only one procedure, this means 2.54 per cent of Canadians waited for treatment in 2007, which varied from a low of 2.02 per cent in Ontario to a high of 5.01 percent in Saskatchewan.

“The promise of the Canadian health care system is not being realized. A profusion of research shows that cardiovascular surgery queues are routinely jumped by the famous and politically connected and low-income Canadians have less access to health care,” Esmail said.

“This grim portrait is the legacy of a medical system offering low expectations cloaked in lofty rhetoric. It’s one defended by special interest groups with a stake in maintaining the status quo. The only way to solve the system’s most curable disease – lengthy wait times that are consistently and significantly longer than physicians feel is clinically reasonable – is for substantial reform of the Canadian health care system.”

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The Fraser Institute is an independent research and educational organization based in Canada. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute’s independence, it does not accept grants from governments or contracts for research.

Most discussions about the rising cost of health care emphasize the need to get more people insured. The assumption seems to be that insurance – rather than the service delivered by doctor to patient – is the important commodity.

But perhaps the solution to much of what currently plagues us in health care – rising costs and bureaucracy, diminishing levels of service – rests on a radically different approach: fewer people insured.

You don't need to be an economist to understand that any middleman interposed between seller and buyer raises the price of a given service or product. Some intermediaries justify this by providing benefits, such as salesmanship, advertising or transport. Others offer physical facilities, such as warehouses. A third group, organized crime, utilizes fear and intimidation to muscle its way into the provider-consumer chain, raking in hefty profits and bloating cost, without providing any benefit at all.

The health insurance model is closest to the parasitic relationship imposed by the Mafia and the like. Insurance companies provide nothing other than an ambiguous, shifty notion of "protection." But even the Mafia doesn't stick its nose into the process; once the monthly skim is set, Don Whoever stays out of the picture, but for occasional "cost of doing business" increases. When insurance companies insinuate themselves into the system, their first step is figuring out how to increase the skim by harming the people they are allegedly protecting through reduced service.

Insurance is all about betting against negative consequences and the insurance business model is unique in that profits depend upon goods and services not being provided. Using actuarial tables, insurers place their bets. Sometimes even the canniest MIT grads can't help: Property and casualty insurers have collapsed in the wake of natural disasters.

Health insurers have taken steps to avoid that level of surprise: Once they affix themselves to the host – in this case dual hosts, both doctor and patient – they systematically suck the lifeblood out of the supply chain with obstructive strategies. For that reason, the consequences of any insurance-based health-care model, be it privately run, or a government entitlement, are painfully easy to predict. There will be progressively draconian rationing using denial of authorization and steadily rising co-payments on the patient end; massive paperwork and other bureaucratic hurdles, and steadily diminishing fee-recovery on the doctor end.

Some of us are old enough to remember visiting the doctor and paying him/her directly by check or cash. You had a pretty good idea going in what the service was going to cost. And because the doctor had to look you in the eye – and didn't need to share a rising chunk of his profits with an insurer – the cost was likely to be reasonable. The same went for hospitals: no $20 aspirins due to insurance-company delay tactics and other shenanigans. Few physicians became millionaires, but they lived comfortably, took responsibility for their own business model, and enjoyed their work more.

Several years ago, I suffered a sports injury that necessitated an MRI. The "fee" for a 20-minute procedure was over $3,000. My insurance company refused to pay, so I informed the radiologist that I'd be footing the bill myself. Immediately, the "fee" was cut by two thirds. And the doctor was tickled to get it.

A few highly technical and complex procedures that need to amortize the purchase of extremely expensive hardware will be out of reach for any but the wealthiest patient. For that extremely limited category, insurance might work. A small percentage of indigent individuals won't be able to afford even low-cost procedures. For them, government-funded county facilities are the answer, because any decent society takes care of the weakest among us. But a hefty proportion of health-care services – office visits, minor surgeries – would be affordable to most Americans if the slice of the health-care dollar that currently ends up in the coffers of insurance companies was eliminated.

When I was in practice as a psychologist, I discussed fees up front with prospective patients, prior to their initial visit. People appreciated knowing what to expect and my bad debt rate was less than 1%. That allowed me to keep my charges reasonable and, on occasion, to lower them for less fortunate patients. And I loved my job because I was free to concentrate on what I went to school for: helping people, rather than filling out incomprehensible forms designed to discourage me from filing them in the first place.

Physicians and other providers need to liberate themselves from the Faustian bargain they've cut with the Mephistophelian suits who now run their professional lives. Because many doctors are loath to talk about money, they allowed themselves to perpetuate the fantasy that "insurance is paying." It isn't. There is no free lunch and no free physical exam.

If substantial numbers of health-care providers shook off the insurance monkey on their back, en masse, and the supply of providers was substantially increased by opening more medical schools, the result would be a more honest, cost-effective system benefiting everyone. Except the insurance companies.

Dr. Kellerman, clinical professor of pediatrics and psychology at USC's Keck School of Medicine, is the author of numerous crime novels and three books on psychology. His latest novel is "Compulsion" (Ballantine, 2008).

See all of today's editorials and op-eds, plus video commentary, on Opinion Journal.

Innovators are bringing consumer-oriented medicine to market, with promising results.

Summer 2008

For seriously ill patients, American health care is second to none. Our commitment to innovation is unmatched; our researchers have won more Nobel Prizes for medicine than all other countries’ combined; our biotech and pharmaceutical industries, thanks partly to lavish federal funding for basic science research, are the envy of the developed world. So lopsided is the field that thousands of European scientists have relocated to companies in the U.S., where they have a better chance of transforming cutting-edge research into lifesaving new medicines.

But American health care is also much more confusing, impersonal, and expensive than it needs to be. Conflicting opinions from doctors and insurers often strand patients with complex diseases in a medical maze. Many primary-care physicians, frustrated with red tape and puny reimbursements, limit the number of Medicare and Medicaid patients whom they see, or they drop out of the profession altogether. Adding insult to injury, employers and employees face seemingly endless cost increases, with health-insurance premiums rising much faster than inflation or income.

Thankfully, entrepreneurs are finding ways to bring innovative, consumer-oriented health care to market—simplifying medical decisions, reinvigorating primary care, and lowering health-care costs. From health insurance to DNA-driven medicine, American health care is experiencing a revolution from below that promises to improve quality, lower costs, and empower people to control their own health care.

Today, we shop for cut-rate hotels on Travelocity, bargain for airfares on Priceline, and seek reliable information on everything from computers to flat-screen TVs at CNET. The same information explosion is occurring in health care. Dozens of websites, such as WebMD, Revolution Health, and eHealthInsurance, now offer consumers up-to-the-minute information on medical conditions, drugs, and insurance options, as well as basic quality information on doctors and hospitals. Internet-savvy patients can walk into their doctors’ offices knowing more about the latest treatments than their physicians do.

Critics counter that health care is more complicated than hotels. Without someone to help manage complex information, they point out, patients may find themselves overwhelmed by options, fall prey to snake-oil salesmen, or fail to see that they have received incorrect diagnoses or poor treatment plans. But where critics see a problem, entrepreneurs see an opportunity. Companies are finding ways to make even the most complicated medical decisions simpler for patients.

Take the Boston-based firm Best Doctors, founded in 1989 by Harvard Medical School professors. Best Doctors uses peer evaluations of physicians—polling 50,000 doctors worldwide in 400 medical specialties—to identify leading medical experts and then makes them available to 10 million patients in 30 countries. Normally, insurance companies limit patients’ access to specialists by requiring prior authorization for referrals, limiting access to preferred networks, or asking patients to pay more out of pocket. Patients whose employers offer Best Doctors, on the other hand, can go directly to the firm without prior authorization whenever they have serious medical problems and need help making decisions.

One such patient is John de Beck, a California teacher diagnosed with prostate cancer. De Beck faced a dizzying array of options, from cutting-edge robotic surgery to more traditional surgical, hormone, and radiation treatments. Since his employer had contracted with Best Doctors, John immediately had access to a “handler” who got John’s permission to send his medical records—including original biopsy slides and CT scans—to a Best Doctors clinical team. The team wrote a synopsis of John’s case and sent it to a leading Harvard expert on prostate cancer. Within a few weeks, John and his doctor got a binder from the expert that examined and explained his treatment options and made a personal recommendation for him.

Over the next year, John consulted with Best Doctors every time he needed to make a key decision about his treatment—for example, getting another opinion from a University of Chicago expert about a new type of radiation treatment, proton therapy. The depth of the reviews—and the fact that they came from leading experts who had no stake in his case—proved invaluable. “I can’t imagine, with the income that I’ve got, to be able to even find . . . somebody to personally review my case and write a personal diagnosis,” de Beck says.

“We trust patients to self-select,” Best Doctors president Evan Falchuk explains. “When they feel uncertain about something, they have the most interest in making sure things go right.” Falchuk hopes that Best Doctors is part of a growing trend toward more consumerism in health care—even in single-payer systems like Canada’s. “Even government-run systems are suffering from the same cost trends we are,” he says. Consequently, they are searching for ways to share costs with people, “and as the financial burdens fall more on individuals, those individuals want control.”

Marcus Welby, M.D. last aired on ABC in 1976. Fast-forward 30 years or so, and think about the prime-time doctor dramas that have replaced it: ER, Grey’s Anatomy, House, Scrubs, and Nip/Tuck. The folksy primary-care doctor familiar to patients a generation ago has all but vanished from America’s primary cultural medium, television—and this reflects his real-life decline. Insurance reimbursements, and especially Medicare, may pay primary-care physicians only a small fraction of the actual costs of treating patients, especially after one takes into account rising demands on doctors’ time and dramatically increased administrative overhead. Consequently, many doctors are retiring or avoiding primary care. In reality, as on television, hospital emergency rooms and expensive specialists are replacing them.

Personal relationships between primary-care doctors and patients foster long-term health and keep health-care costs in check, so this is an unwelcome development. And it could hardly come at a worse time. The need for primary care will rise rapidly in the years ahead as tens of millions of aging baby boomers develop serious chronic ailments ranging from heart disease to diabetes to cancer. The nation’s over-65 population will double by 2030; the American Academy of Family Physicians, however, reports that from 1997 to 2005, the number of med-school graduates entering primary-care residencies dropped 50 percent.

Policymakers compound the problem by advocating universal insurance schemes that would inject millions more patients into the system without fixing any of its underlying problems. In July 2007, the Wall Street Journal reported that many Massachusetts residents were having trouble finding primary-care providers, even as the state embraced a universal insurance mandate that could thrust 550,000 previously uninsured residents into overcrowded doctors’ offices. The Massachusetts Medical Society found that for new patients, the average wait to see an internist was up 57 percent since the previous year, to more than seven weeks.

Primary-care doctors’ woes are severe in the rest of the country, too. “Most physicians out there are in networks, meaning that they accept insurance and are held to the reimbursement schedules currently available to them,” says Kevin Kelleher, a Virginia doctor. And insurance rewards procedures—tests and surgeries—much more handsomely than it does working with patients on the prevention and management of chronic disease. The result: as reimbursements have flatlined or even declined, the traditional family practice has evolved into a high-volume, prebooked business in which physicians have just a few minutes to spend with each patient. “Double booking has become extremely common in the last six or eight years,” Kelleher observes. “Doctors don’t have any quality time to spend with their patients. . . . They’re lucky if they can address a current pressing health issue, let alone discuss prevention.”

Instead of waiting for the system to change, some physicians are changing the system. In 2004, in Reston, Virginia, Kelleher and Mark Vasiliadis founded Executive Healthcare Services, where clients receive a full range of preventive, primary-care, and acute treatments for a flat monthly fee of $150 to $450, depending on the size of their families. There are no contracts; if EHS clients don’t feel that they’re getting value for their money, they can leave. Kelleher says that EHS’s patient-retention rate is about 98 percent.

This out-of-pocket payment model counters some of the system’s perverse incentives. “We can very frequently just discuss problems on the phone with patients, since 90 percent of the diagnosis traditionally comes from their history,” Kelleher points out. “If someone calls with elbow pain, I can spend 15 minutes on the phone with them. I don’t have a financial impetus to get them into my office.”

Comparatively high prices allow EHS to operate with just 300 patients or so, a stark contrast with the 2,500 patients whom the average primary-care doctor must serve in order to turn a profit after low insurance reimbursements. EHS’s enviable scale won’t work nationwide, Kelleher admits, but he thinks that components of his program could be modified to accommodate larger practices and lower prices. For instance, patients could bolster their current insurance reimbursements with a flat monthly fee—maybe as little as $20—and in exchange receive enhanced primary-care access (longer appointments, say) from doctors with somewhat smaller practices.

Further, filing claims with insurance companies is so time-consuming and expensive that doctors could lower prices—perhaps by 20 to 30 percent or more—simply by offering more basic services on a cash basis. Primary-care physicians in this type of system would likely see fewer patients every day but could offer them more time and attention. Some observers have derisively called this “concierge medicine.” But it would be more accurate to say that Kelleher and his colleagues have embraced a primary-care model that puts the doctor-patient relationship first—where it used to be.

This model seems to be gaining traction with frustrated patients and doctors. Last October, one West Virginia doctor made national news when the Wall Street Journal chronicled his prepaid primary-care plan. Vic Wood offers the 100 or so patients in his plan unlimited primary and urgent care, basic diagnostic tests, and many generic drugs for a monthly fee ranging from $83 for an individual to $125 for a family.

One patient is a private music teacher who, before joining Wood’s plan, had gone without health insurance for four years because his wife’s health insurance would have cost him $400 a month. Wood diagnosed him with high cholesterol and is treating him, with excellent results. A local business started offering Wood’s clinic as a benefit, switched to a major medical plan with a high deductible, and saw its monthly premiums drop by $4,000. The firm’s health insurer lowered its rates the following year, noting that workers “required less time in the hospital and used Dr. Wood’s clinic for nearly all of their primary care,” reported the Journal.

Wood’s clinic isn’t without its detractors, particularly among insurance companies that see prepaid physician plans as competition. But it hasn’t deterred him. “I’ll sign up one patient at a time if I have to,” Wood told the Journal. “I can’t see my practice surviving for the next 10 years without this model.”

Henry Ford didn’t invent the automobile. He just found a way to mass-produce it, allowing him to sell an affordable, reliable form of transportation to middle-class Americans. Can twenty-first-century entrepreneurs do the same for health care, which seems defined by expensive, labor-intensive services? In a word, yes—by “unbundling” inexpensive services from expensive settings like hospitals and by moving from a reactive medical model that treats already sick patients (very expensive) to a predictive, personalized model that monitors patients for disease predispositions and keeps them healthy (far cheaper).

Wal-Mart, for all the fire that labor activists direct at it, is quickly becoming the Henry Ford of health care. It took a bold stride into health-care markets in 2006, rolling out a Florida pilot program offering dozens of generic drugs at just $4 for a month’s supply. The program quickly spread to other states and added many new generics, including medicines for glaucoma, attention deficit disorder, fungal infections, and acne. As of May 2008, Wal-Mart estimates, the program has saved consumers over $1 billion in prescription drug costs. Competitors like Target and Kroger have rushed to match its offerings.

Another low-price, low-tech step toward shrinking health-care costs is the emergence of convenient-care clinics like RediClinic and MinuteClinic, which are housed in larger retail stores like Wal-Mart, Target, and CVS. The first convenient-care clinic, QuickMedx (later renamed MinuteClinic), opened in Minneapolis–Saint Paul in 2000 after its founder, Rick Krieger, couldn’t find a doctor on short notice to administer a strep-throat test to his son. Wasn’t there a better way, he wondered, to get fast, convenient care for simple illnesses? “We are not talking about diabetes, cancer, or heart disease,” he told Harvard Business School researchers in 2002. “We are talking about colds, throat and ear infections.”

The convenient-care clinics all use a similar model: offer a list of simple, low-cost health-care services for the consumer who can’t see his regular physician or doesn’t have one. The clinics keep prices down by offering care from a skilled nurse practitioner under the oversight of a licensed physician. Instead of skipping care or going to an emergency room, patients strapped for time or money can just head for a local store. As of November 2007, some 800 convenient-care clinics were operating across the U.S., up from 62 in 2006, with hundreds more planned.

Despite their popularity with consumers, the clinics have met with opposition from some state medical societies and groups within the American Medical Association that feel that the clinics fragment health care by preventing patients from developing long-term relationships with primary-care physicians. Web Golinkin, RediClinic’s chief executive officer, believes that these concerns are greatly exaggerated. “The reality is that care is already fragmented,” he says. Further, millions of Americans don’t have primary-care physicians or have trouble accessing them, and millions more lack insurance; convenient-care clinics may not address all these patients’ needs, but they can at least get them routine care and provide an entry point into the broader health-care system. “We see a lot of patients who are outside of our scope of practice,” Golinkin acknowledges, “but we refer them back to their primary-care physicians if they have one and help them find one if they don’t.” He objects to the idea that patients must seek an expensive consultation for every medical condition: “Spending $200 or $250 to treat a consumer’s strep throat is not a sustainable model.”

Convenient-care clinics show a lot of promise, but state regulations that prohibit them outright or make it difficult for them to operate effectively are holding them back. “Probably the biggest hurdles are regulations of physician oversight of nurse practitioners,” says Golinkin. Most states require such supervision, but some take the principle to an extreme by requiring doctors to be on site at the clinics or by severely limiting the number of nurses they can manage at one time. These regulations drive up clinic costs, making them unprofitable.

Other states strictly regulate who can own and operate the facilities. According to the California HealthCare Foundation, California laws “require ownership by local physicians who operate the health care facility”; as a result, the CHCF notes, “there are very few clinic operators or clinics in California,” though MinuteClinic is trying to gain a foothold there. And even in California, promising early evidence suggests that convenient-care clinics, despite their scarcity, are changing the economics of basic health care. In May 2007, the Los Angeles Times reported that the state’s largest physicians’ association, HealthCare Partners Medical Group (with more than 500,000 patients), started posting prices—at a substantial markdown—for many common procedures, in a direct concession to competitive pressure from convenient-care clinics.

The really exciting strategies for controlling health-care costs are genetic technologies that will identify the tiny differences in DNA that make some people susceptible to various diseases, from diabetes to Alzheimer’s. Myriad Genetics reports $100 million in revenue for a test that has told 150,000 female customers whether they carry the BRCA gene, which puts them at increased risk of developing breast or ovarian cancer. Another company, Navigenics, offers a $2,500 test called Health Compass that screens consumers for 20 conditions, including diabetes, prostate cancer, and obesity. “In five years, we will have a very large number of these gene tests,” Kari Stefansson, who leads the biotech firm deCode Genetics, told Forbes, “and they will be frequently used, at least by an educated portion of the population who will want to know.”

Over the next 10 to 15 years, moreover, technology will offer Americans customized health-care solutions tailored to their individual genetic profiles—individualized regimens of exercise, diet, and drugs to ward off diseases far earlier and more effectively than is possible today. One small company that exemplifies the trends in personalized medicine is Genomas, which is exploring pharmacogenomics, or how drugs interact with people’s genes to produce different reactions. Many patients taking common drugs—statins for high cholesterol, for instance, or antipsychotics for mental illness—have adverse reactions that lead them to switch medicines repeatedly or to stop taking them altogether. These actions can lead to more expensive health complications, like heart attacks. Some experts estimate that about 2 million serious adverse drug reactions may occur every year, producing 100,000 deaths and billions of dollars in excess health-care costs. Genomas’s technology, which it calls PhyzioType, may help physicians and insurers predict common side effects and realize huge savings. (One study has found that effective genetic testing for a single blood-thinning drug, warfarin, could help patients avoid “85,000 serious bleeding events and 17,000 strokes annually,” reducing costs by $1.1 billion.)

The field remains in its infancy. Some voice concerns about the quality of the science linking newly discovered genes with complex conditions like heart disease or diabetes, and worry that fly-by-night companies will just hand patients test results without any counseling about what they mean. These concerns are legitimate but not insurmountable—and it’s easy to see how powerful market applications will emerge. Patients with a family history of chronic ailments like diabetes, heart disease, and cancer, for example, might gladly pay extra for an insurance package that included genetic counseling and guidance on which drugs were likely to offer the best outcomes and the least risk of dangerous side effects.

To unleash the full promise of these new technologies and business models, policymakers should deregulate the market for medical products and services while liberating consumer demand. Congress should give individuals the same tax deduction for the purchase of health insurance that employers now have. Also, because each state currently requires any insurer doing business in that state to cover certain mandated services—driving up the cost of basic health insurance—we should create a national market for health insurance, perhaps through an optional federal charter (as now exists for banks) or through direct cross-border sales. This increase in individually owned insurance and real market competition would encourage companies to offer a broad mix of new health-care services and insurance products that cater to consumers’ real needs at prices they can afford. As the insurance environment became defined by individuals purchasing their own portable coverage, employers, unions, and hospitals would become trusted health-care intermediaries and help patients navigate the system.

In 2003, Congress enacted a moratorium on Medicare payments to physician-owned hospitals that has since expired, though opponents keep trying to resurrect it. It should stay dead, thus encouraging health professionals to explore new venues for patient care and create new bundles of health-care services. Doctors, convenient-care clinics, and specialty hospitals could then compete for customers in a wide variety of health-care settings. There isn’t one store for electronics, and there’s no reason that there should be one venue, or just a few, for health care.

Today, you don’t have to pick up a science-fiction novel to envision the future of health care. Convenient-care clinics already offer a wide range of basic health-care services at affordable prices; more services—perhaps including genetic testing—are sure to follow, with the results flowing back to a patient’s primary-care physician in an electronic health record that is reliable, secure, and easy to use. Doctors who are now overwhelmed and underpaid will opt out of insurance for most basic services in return for prepaid primary-care agreements that offer patients more convenience and better care at affordable prices. Waiting at a doctor’s office or an emergency room for basic care will decline, replaced by access to your primary-care physician through e-mail and even cell phone. Entrepreneurs will mine reams of information to help devise state-of-the-art patient-care regimens for complex diseases like cancer, helping patients in small Iowa towns get the quality of care currently available only at academic hospitals in Boston or New York. Patients will pay for many more basic services out of tax-exempt health savings accounts (HSAs), driving continuous competition and innovation. Finally, advances in genetics will enable doctors to match patients with treatment regimens that give them the best chance of avoiding unwanted side effects and maximizing good outcomes.

In short, from HSAs to DNA, we’ll be matching the right treatment to the right patient at the right price, and we’ll be restoring patients to the center of medical decisions—which is where they belong.

Paul Howard is the director of the Manhattan Institute’s Center for Medical Progress and the managing editor of its web-based journal, Medical Progress Today.

Forty years ago President Nixon declared a "war on cancer" and signed the National Cancer Act in December 1971, which dramatically increased government funding for oncology research. More than a few Jeremiahs are using the anniversary to lament the supposed stagnation of progress against the disease, but this is more accurately a moment to celebrate the rapid and ongoing U.S. revolution in cancer diagnosis and treatment.

Pessimism was more warranted in the late 1980s and early 1990s, as the cancer death rate continued to climb and a new generation of cancer drugs seemed to stall out. But the death rate has since fallen by 18%, which shows that medical advances are usually incremental and provisional.

A better measure is the five-year survival rate, the share of all patients who are still alive a half-decade after their diagnosis. That measure has climbed to about 68% for all cancers from 45% in 1975, according to the National Cancer Institute. Another way of putting it is that two-thirds of patients can live many productive years with a chronic condition and in many cases even be cured.

Progress is particularly evident against the four most common cancers: For prostate cancer, the five-year survival rate has surged to 99.9% today from 67% in the 1970s. Survival rates have been rising for breast cancer since 1983 and for colorectal cancer since 1975. Even for lung cancer—the No. 1 cancer killer—the survival rate has been rising since 1988, though it is still less than 20%.

If the pace of anticancer progress has been remarkable in some areas, more modest in others, that's because Nixon's formulation had it wrong. This is a war against cancers.

Today we have a far more sophisticated and profound understanding of the biology of cancers, to the point where they are less medically defined by the location in the body where they happen to begin. There is no such thing as "lung cancer," but rather a constellation of different cancers with diverse biologies and behaviors. Treatment is now guided by cancer "panomics," the individual combination of genes, proteins and molecular pathways that drive the uncontrolled growth of malignant cells.

This scientific ferment is starting to diffuse through drug development, and oncologists will increasingly be able to target therapies to the patients most likely to benefit. The first anticancer drug, nitrogen mustard, emerged in 1949, and the number expanded to about 25 by 1971. Today there are hundreds, yet only about 5% to 8% of new cancer drugs succeed.

One problem is that the next generation of anticancer medicines is being delayed by a regulatory system that is far too rigid and controlling. A 2010 Institute of Medicine report noted that the traditional Food and Drug Administration clinical trials system, which was designed in the 1950s and has barely changed, is too slow, complex and inefficient. For progress to continue it needs to be modernized—most of all with so-called adaptive trial design.

That model evolves as a trial proceeds to incorporate new knowledge and recognizes that often only narrow patient subgroups will have a specific molecular defect and thus respond. But the FDA rejects such methods as insufficiently pure and its institutional culture continues to adhere to only a few crabbed measures of the value of a new treatment.

Federal funding for the National Cancer Institute and other programs has grown moderately in recent years. But it has been losing its buying power as medicine becomes more complex, and it has not grown as fast as the rest of the budget as entitlements begin to crowd out all other spending.

One of the great ironies of the post-1971 cancer era is that the failure to reform Medicare and Medicaid is devouring the money available for the basic medical and scientific research that is a proper role for government. The cancer revolution will continue if government allows it.

Ever tried to get a firm price tag before going to the doctor or the hospital? Good luck. Historically, the search for healthcare prices has been an exercise in futility.

But that's starting to change. With healthcare costs rising and consumers on the hook for a growing share of their medical bills, doctors, hospitals and health insurers are feeling the pressure to make healthcare prices more readily available.

"We expect consumers to cover more of their care and decide how to expend resources. But it's unacceptable to expect them to do that without providing them with what they need to make price and quality decisions," said Suzanne Delbanco, executive director of the group Catalyst for Payment Reform.

Last week the nonprofit organization issued a report on medical pricing that graded states' efforts to provide useful pricing information. In all, 36 states got a grade of D or F, including California, which got a D.

Under a state law that took effect in 2006, California hospitals must publish average charges for common procedures on the website of the California Office of Statewide Health Planning and Development. However, experts warn that typically these indicate what hospitals charge, not what they're paid.

Although the usefulness of price information varies widely, there are a growing number of tools available to help consumers. Here are a few places to look for prices the next time you need to know what that lab test or procedure is going to cost:

Let's say you've injured your knee and your doctor orders an MRI to see what's going on. You have insurance, but you want to know how much of the test's cost is going to come out of your own pocket.

Once on the site's medical cost estimator you'll input your ZIP Code, indicate whether you have insurance and find your procedure on a drop-down list. Up pops the estimated price.

Also on display will be the amount your insurer is likely to cover (you can adjust percentages based on the details of your health plan) and how much you would pay. You'll also be informed about the extras. For example, a plus sign next to your procedure is a cue that it's coupled with other services likely to drive up the price, said Robin Gelburd, Fair Health's president.

• Pricing sites such as HealthBlueBook.com and NewChoiceHealth.com offer up the average cost that insurance companies pay for many inpatient and outpatient procedures in your area. You can use that as a starting point to negotiate with your doctor.

• SaveOnMedical.com is a new site set up to compare prices and quality ratings for services such as MRIs, X-rays and CT scans. Here you'll be shown a list of providers by the price they charge once you input the service you need along with your ZIP Code or city.

Checking prices is not easy and sometimes unsatisfactory. Just ask Patti Singer, a Syracuse, N.Y., journalist who says she has become an avid healthcare shopper.

Because most tools offer a ballpark figure, she's sticking with the old-fashioned method of calling both her healthcare provider and insurer, Singer said. "I want to know exactly what I'm paying. I don't want an estimate. I want the price."

Although she's usually successful in getting a price, it's often at the cost of many hours spent trying, Singer said. "I can spend three hours over a day or two days making the phone calls. If I worked at a job without access to a telephone all the time, I couldn't do it."

Why do this? A study published last year by Delbanco's group on price variation, for example, found that colonoscopies varied in cost from one provider to another by as much as 1,000%.

These forces have prompted a kind of arms race among insurers, employers and public and private websites to build cost calculators and other tools that show medical costs.

According to Robert Zirkelbach, spokesman for the insurance industry trade association America's Health Insurance Plans, most health plans make available to policyholders the average cost for procedures within a geographic area or ZIP Code; some even show cost by specific healthcare providers.

For instance, insurer Aetna Inc. has a Member Payment Estimator tool that provides cost estimates for more than 550 commonly used health services. Members can view 10 cost estimates at a time for the procedure they need in order to shop for the best price. According to the company, members searching more than 30 commonly used services spent roughly $170 less on their care than the average price estimate for that service.

"The specific type of information varies from plan to plan. And you're seeing a lot of innovation in this area," Zirkelbach said.

Employers often are in the cost calculator game as well, and have been the main drivers behind the movement toward releasing healthcare prices from their black box. If you get health insurance at work, check with your employer and your insurer to see what, if any, tools are available.

When using any of these cost estimation tools, it's crucial to keep in mind that hospitals, doctors, anesthesiologists and labs may all bill separately. You've got to consider the full picture to get a handle on your likely costs. Also remember that lab tests, MRIs and even surgeries are often less expensive at independent medical centers than at hospitals, said Matt Schneider, co-founder of SaveOnMedical.com.

And do your homework in advance of receiving non-urgent care, he said. "If you're armed with information, that's a much better point than after the procedure and after you get a bill. Usually those are very difficult to negotiate."

Despite the efforts underway, our fragmented healthcare system still puts up barriers to getting accurate medical costs. But the experts are optimistic that the mystery surrounding medical pricing is disappearing.

The Myth of ObamaCare's AffordabilityThe law's perverse incentives will have the nation working fewer hours, and working those hours less productively.By Casey B. MulliganSept. 8, 2014 7:20 p.m. ET

Whether the Affordable Care Act lives up to its name depends on how, or whether, you consider its consequences for the wider economy.

Millions of people pay a significant portion of their income for health insurance so they and their families can get good health care when they need it. The magnitude of their sacrifices demonstrates the importance that people ascribe to health care.

The Affordable Care Act attempts to help low- and middle-income families avoid some of the tough sacrifices that would be necessary to purchase health insurance without assistance. But no program can change the fundamental reality that society itself has to make sacrifices in order to deliver health care to more people. Workers and therefore production have to be taken away from other industries to beef up health care, or the workforce itself has to get bigger, or somehow people have to work more productively.

Although the ACA helps specific populations by giving them a bigger slice of the economic pie, the law diminishes the pie itself. It reduces the amount that Americans work, and it makes their work less productive. This slows growth in both personal income and gross domestic product.

In further expanding the frontiers of redistribution, the ACA reduces the benefits of employment for both employers and employees. Employers that don't provide health insurance are either subject to large penalties based on the number and types of employees that they have, or are threatened with enormous penalties when they get the opportunity to expand their business. About a quarter of the nation's employees, more than 35 million men and women, currently work for employers that don't offer health insurance. These tend to be small and midsize businesses with employees who already make less than the average American worker. The result of penalizing businesses for hiring and expanding is going to be less hiring and expanding.

Another sixth of the nation's employees—almost 25 million people—are in a full-time position that makes them ineligible for the law's new and generous assistance with health-insurance premiums and cost sharing. They are ineligible for subsidies simply because they are working full time and thereby eligible for their employers' coverage. Because the only ways for them to get the new assistance is to move to part-time status, find an employer that doesn't offer coverage, or stop working, we can expect millions of workers to make one or more of those adjustments.

Most people wouldn't give up working merely to qualify for a few thousand dollars in assistance. But it is a mistake to assume that nobody is affected by subsidies, because there are people who aren't particularly happy with working, planning to leave their job anyway, or otherwise on the fence between working and not working. A new subsidy is enough to push them over the edge or to get them to stop working sooner than they would have otherwise.

The law has effects that extend well beyond the employment rate and the average length of the workweek. People, businesses and entire sectors will jockey to reduce their new tax burdens or enhance their subsidies. Their adjustments to the new incentives will make our economy less productive and stifle wage growth, even among workers who have no direct contact with the law's penalties and subsidies.

The "29er" phenomenon is a good example of how the law harms productivity. Because ACA's "employer mandate" requires firms with 50 or more full-time workers to offer health plans to employees who work more than 30 hours a week, many employers and employees have adopted 29-hour work schedules. This is not the most productive way to arrange the workplace, but it allows employers to avoid the mandate and its penalties and helps the employees qualify for individual assistance.Opinion Video

All of this, and much more, exacerbates the societal problem that the economy cannot expand its health sector without giving up something else of value. A complex law like the ACA has a few provisions that encourage work, such as counting unemployment income against eligibility for health assistance. But the bulk of the law overwhelms them. The ACA as a whole will have the nation working fewer hours, and working those hours less productively.

I estimate that the ACA's long-term impact will include about 3% less weekly employment, 3% fewer aggregate work hours, 2% less GDP and 2% less labor income. These effects will be visible and obvious by 2017, if not before. The employment and hours estimates are based on the combined amount of the law's new taxes and disincentives and on historical research on the aggregate effects of each dollar of taxation. The GDP and income estimates reflect lower amounts of labor as well as the law's effects on the productivity of each hour of labor.

By the end of this decade, nearly 20 million additional Americans will have health insurance as a consequence of the law. But the ultimate economywide cost of their enrollments will be at least double what it would have been if these people had enrolled without government carrots and sticks; that is, if they had decided it was worth spending their own money on health insurance. In effect, people who aren't receiving assistance through the ACA are paying twice for the law: once as the total economic pie gets smaller and again as they receive a smaller piece.

The Affordable Care Act is weakening the economy. And for the large number of families and individuals who continue to pay for their own health care, health care is now less affordable.

Mr. Mulligan is a professor of economics at the University of Chicago and the author of the new e-book "Side Effects: The Economic Consequences of the Health Reform" (JMJ Economics, 2014).

The Myth of ObamaCare's AffordabilityThe law's perverse incentives will have the nation working fewer hours, and working those hours less productively.By Casey B. Mulligan... I estimate that the ACA's long-term impact will include about 3% less weekly employment, 3% fewer aggregate work hours, 2% less GDP and 2% less labor income. ...

As a doctor for 28 years who has sent patients for tens of thousands of blood test, read results of a hundred thousand, I can tell you this sounds like the real thing! If this is as is promoted this will wipe out LabCorp and Quest unless they either buy this out or in some way copy it. Even Henry Kissinger is smitten by the CEO:

I still have questions about accuracy and not clear how it exactly works. It sounds like the small amount of blood taken from I guess a finger stick is placed into some equipment that can take readings (optically?) and store through a wireless connection to some data bank and the person gets the results in hours (?).